Essays on consumer behavior in the Turkish credit card market

Abstract

This thesis discusses the payment behavior of cardholders in the Turkish credit card market using primary data obtained from the Survey of Credit Card Usage conducted between April and June 2009 in 31 cities of Turkey with 2576 cardholders. This thesis consists of two essays. In the first essay, consumer characteristics related with credit cards are analyzed. After examining the reasons of credit card usage, the main factors affecting holding one or more credit cards are investigated. Moreover, the reasons for choosing a credit card brand as one’s main card are stated. Notably, non-price marketing tools such as installments turn out to be more effective strategies for credit card issuers to impress potential cardholders than price competition tools such as low interest rates or annual fees. Furthermore, the main reasons for nonpayment behavior of cardholders (such as an insufficient income or income shocks) are explored. In the second essay, different types of cardholders -convenience users, rational revolvers and irrational revolvers- are analyzed with logit and multinominal logit models using demographic, personal, financial and attitudinal characteristics of cardholders. The results show that public sector workers or cardholders who did more investigation before attaining their cards are more likely to be convenience users. On the other hand, making unnecessary purchases with credit cards increases the probability of being an irrational revolver while people who obtained their main credit cards by applying to other banks than their main banks have a bigger chance of rational revolvers.