Nonprice Competition in the Turkish Credit Card Market

12 Pages Posted: 21 Sep 2011

See all articles by G. Gulsun Akin

G. Gulsun Akin

affiliation not provided to SSRN

Ahmet Faruk Aysan

Bogazici University

Gazi Kara

Board of Governors of the Federal Reserve System

Levent Yildiran

Bogazici University - Department of Economics

Date Written: October 2011

Abstract

Attempts to explain high and sticky credit card rates have given rise to a vast literature on credit card markets. This article endeavors to explain the rates in the Turkish market using measures of nonprice competition. In this market, issuers compete monopolistically by differentiating their credit card products. The fact that consumers perceive credit cards and all other banking services as a bundle allows banks to also employ bank level characteristics to differentiate their credit cards. Thus, the features and service quality of banks are expected to affect credit card rates. Panel data estimations also control for various costs associated with credit card lending. The results show that nonprice competition variables have significant and robust effects on credit card rates.

JEL Classification: G21, G28, O16

Suggested Citation

Akin, G. Gulsun and Aysan, Ahmet Faruk and Kara, Gazi and Yildiran, Levent, Nonprice Competition in the Turkish Credit Card Market (October 2011). Contemporary Economic Policy, Vol. 29, Issue 4, pp. 593-604, 2011, Available at SSRN: https://ssrn.com/abstract=1931329 or http://dx.doi.org/10.1111/j.1465-7287.2010.00233.x

G. Gulsun Akin (Contact Author)

affiliation not provided to SSRN

No Address Available

Ahmet Faruk Aysan

Bogazici University ( email )

Bebek, ─░stanbul 34342
Turkey

Gazi Kara

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Levent Yildiran

Bogazici University - Department of Economics ( email )

Natuk Birkan Building
Bebek
Istanbul, 34342
Turkey

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