Credit Cards and The Option to Default
DOI:
https://doi.org/10.1016/1057-0810(95)90007-1Abstract
The value of the option to default on unsecured credit contracts is estimated and found to be signij?cantly impacted by state and federal laws governing creditors’ collection practices and bankruptcy. Thedatasuggest thattheexpected valueoftheoptiontodefault influences debtors’ choices in default and is correlated with their use of their credit cards before default. Cardholders who use their lines of credit very intensely before default are signtjiiantly more likely to make choices in default which allow them to realize a greater benefit from default. Furthermore, these results offer a possible explanation for consumers’ seeming insensitivityto interest rates charged on revolving lines of credit.
Downloads
Downloads
Published
Issue
Section
License
Copyright (c) 1995 JAI Press Inc.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Author(s) retain the copyright and full publishing rights without restriction.
Author(s) grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows reusers to distribute, remix, adapt, and build upon the material in any medium or format, for noncommercial purposes only. Reusers must acknowledge the work's authorship and initial publication in this Journal.
Noncommercial means not primarily intended for or directed towards commercial advantage or monetary compensation.
In addition, FSR grants to the UGA Libraries a worldwide, non-exclusive license to all content published by the Journal, including metadata, that is necessary to publish, transmit, and index the Journal and to preserve its content over time.
