Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129935
Authors: 
Seira, Enrique
Castellanos, Sara G.
Hernández, Diego J. Jiménez
Year of Publication: 
2015
Series/Report no.: 
Working Papers, Banco de México 2015-11
Abstract: 
We study the bancarization of marginal borrowers using credit cards and document that this process is difficult: default risk is substantial, returns heterogeneous, and account closings common. We also take advantage of a randomized control trial that varied interest rates and minimum payments in a very wide range. Against our hypothesis, we find that default risk is very insensitive to (randomized) large changes in interest rates and minimum payments. This could imply that regulating these contract terms may not necessarily "protect" consumers against default and that moral hazard in this market is negligible on average.
Subjects: 
Credit cards
Development finance
Consumer behavior
Mexico
JEL: 
D14
D18
D82
G21
Document Type: 
Working Paper
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