Credit Card Effect Research Articles

Efficient Use of Electronic Banking and Financial Performance of Commercial Banks in Rwanda: A Case of Equity Bank Plc

This general objective was to examine effect of efficient use of electronic banking on financial performance of commercial banks with reference to Equity Bank Plc. The specific objectives of the study were to assess effect of internet banking on financial performance of commercial banks in Rwanda; to ascertain effect of Debit and credit cards on financial performance of commercial banks in Rwanda Equity Bank Plc in Rwanda and to establish effect of mobile banking on financial performance of commercial performance in Rwanda. This study is significant as the findings will providing information on influence of electronic banking and financial performance for banking institutions in Rwanda also the finding will help researchers interested in carrying out further studies in this field. This study used descriptive and coefficient regression size effect between variables and for each objective whereby the target population was 370, while a sample size was 193 calculated using Yamane formula obtained using simple random technique. Questionnaire and interview used as a data collection instruments. Data analysis methods were descriptive and multiple regression for quantitative results while content analysis was used for information from interview. After collecting data, analyzing and interpreting data, the study findings showed that Adjusted R Square shows that internet banking, using debits and credits cards and mobile banking contributes up to 87.2% to financial performance of commercial banks in Rwanda and there is a positive and strong correlation between dependent and independent variables whereby internet banking has 0.7742 correlation with financial performance. Credits and Debits cards has 0.812 correlation with financial performance. Mobile banking has 0.967 correction with financial performance. The study recommended that to maximize the influence of easy fund transfer using digital banking on financial performance, banks should prioritize user-friendly and intuitive digital banking interfaces. They should invest in robust security measures to protect customer information and transaction integrity. Regular monitoring, maintenance, and updates of the digital banking platform are crucial to ensure smooth functionality and address any potential issues promptly. The study concluded that, internet banking, credits and debits cards and mobile banking as analyzed independent variables significantly contributes to financial performance. Keywords: Electronic banking, financial performance, Commercial banks, Equity Bank Plc, Rwanda

Pengaruh Kartu Kredit, Dana Float dan Suku Bunga Kebijakan Terhadap Velocity Of Money Di Indonesia

Technology that is developing rapidly, one of which has provided changes to the payment system from cash to payment system non-cash. Changes in the form of payment instruments resulted in a decrease in the use of cash in the community which then had an impact on the velocity of money or the speed of money due to more liquid transactions and more efficient transactions. This study aims to determine the effect of credit cards, electronic money floating funds and interest rates on the velocity of money in Indonesia. This study uses data sourced from the official website of Bank of Indonesia and the Central Statistics Agency (BPS) of Indonesia. The research data used is in the form of monthly time series data from January 2017 to December 2021, the analytical tool used is the Error Correction Model (ECM). The results show that non-cash transactions in the form of credit cards and interest rate policies have a positive effect on money circulation in the long term, while electronic money floating funds have a negative effect on money circulation in Indonesia in the short and long term.

A replication study of the credit card effect on spending behavior and an extension to mobile payments

Prior research has shown that credit cards increase spending behavior as measured by the willingness to pay (WTP) or basket value. This research aims to replicate the credit card effect and to extend this effect to mobile payments. In four empirical studies, of which three online studies and one lab study (total n = 692), we manipulated payment methods (i.e., cash, credit cards, and mobile payments) and measured spending behavior (i.e., WTP and basket value). Across four studies, we did not replicate the credit card effect on either measure of spending behavior, suggesting the effect in the literature may be inflated or may have been fading away. A meta-analysis of the relevant literature revealed the expected credit card effect but also showed that the credit card effect has become weaker through the years and that this effect is contingent on the location of data collection. We also did not find evidence that the credit card effect extends to mobile payments on either measure of spending behavior in the three online studies. However, we found a significant difference between mobile payments and cash on the basket value measure (but not for the WTP measure) in the lab study. This paper also explored whether the pain of payment or payment convenience may be a mechanism underlying the relationship between payment methods and spending behavior. Although the pain of payment tended to be lower and the payment convenience tended to be higher for mobile payments, these effects did not translate into more spending behaviors.

The easy-money effect: credit card spending and hard-work reminders

PurposeThis research paper aims to examine the proposed easy-money effect of credit cards, which stimulates consumers to overspend. This paper shows how such an easy-money effect can be weakened.Design/methodology/approachIn Study 1, an implicit association test was conducted with a sample of 169 participants to test the proposed credit card easy-money effect. In Study 2, experimental data were collected online from 365 participants to test the effectiveness of a hard-work reminder in weakening credit cards’ easy-money effect on consumer spending.FindingsThe proposed credit card easy-money effect exists, with spendthrift (ST) participants associating money with hard work less in the implicit association test after being presented with a credit card cue versus neutral cue. The results from Study 2 show that ST participants spent more on their dinner than tightwad participants when shown a credit card cue. However, this effect could be weakened when STs were also reminded of their hard work by a picture accompanied with words.Practical implicationsThis paper suggests that credit cards’ spending-stimulating effect is due to consumers’ associations between credit cards and easy money. Based on this notion, this paper suggests conditions in which credit cards will stimulate more and less spending.Originality/valueThis is the first research attempt to examine the credit cards’ easy-money effect and the effectiveness of reminding consumers of their hard work to mitigate credit cards’ long-established spending-stimulating effect.

Committing to Plastic: The Effect of Credit Cards on Purchase Intention

When deciding to buy a product, consumers balance consumption utility against financial and psychological costs (pain-of-paying). It has been suggested that credit cards buffer against the pain-of-paying and thereby facilitate spending (the credit card “lift”). We show, first, that credit cards do indeed increase the within-subject likelihood of purchase from an online store closely resembling amazon.com, in a setting where every purchase decision counts and shoppers choose their own consideration set from millions of available products (studies 1-2). Second, we find that the credit card lift disappears for purchases from a prior “wish list”, suggesting that the lift is specifically concentrated on unplanned or impulse purchases (study 3). Finally, we show that credit cards exert influence when a person forms an initial, fully reversible intention to purchase, as shown by the decision to proceed to a checkout screen, and not at the moment of irreversible implementation, at checkout itself. If payment method information is not available at the moment of purchase intention but instead specified only at checkout, then the credit card lift disappears and purchases are made with same frequency as with cash (study 4). This result cannot be reconciled with a rational, financial interpretation of the credit card lift. It also suggests that the lift is better interpreted as a phenomenon of “spending facilitation” by credit cards, rather than one of “spending inhibition” by cash.

Consumer susceptibility to credit card misuse and indebtedness

Purpose – Prior research suggests that payment mechanisms are imbued with cues that affect purchase evaluation and future spending behavior. Credit cards are distinguished from other payment mechanisms as they elicit greater willingness to spend, prompt weaker recollections of past credit expenses and overvaluation of available funds – a phenomena the authors call as “credit card effect.” Little is known about the individuals’ differential exposure to the credit card effect. The purpose of this paper is to present a new concept and measure of susceptibility to the credit card misuse and indebtedness (SCCMI). Design/methodology/approach – The study focussed on young credit card users (aged 18-25) from Malaysia, Singapore, and the UK as they represent varying levels of credit card issuance and consumer protection regulations. The authors conducted confirmatory factor analysis and invariance tests to assess the validity, reliability and parsimony of the proposed scale in the three countries. Further, the authors examined the prediction power of SCCMI on consumer tendency to become a revolving credit card debtor. Findings – Results show that the SCCMI scale is valid, reliable and parsimonious across the multi-country context. The paper provided additional validity support through known-group comparison among various payers of credit card bills. Research limitations/implications – The convenience sampling used for the study is the main limitation. The findings bear important implications for more socially responsible marketing practice and better public policies in credit carder regulation for protecting young credit card users. Practical implications – The new concept and measurement scale can be used for identifying the vulnerable individuals in credit card use, assisting consumer knowledge training, improving policies for credit card regulation, and helping credit card providers in socially responsible marketing practice. Social implications – The cross-country validity of the SCCMI scale provides a unique contribution for monitoring and auditing consumer vulnerability in credit card misuse in Asian and European market conditions. Originality/value – SCCMI offers an original concept that is distinct from previous research in that SCCMI focusses solely on the state of likelihood to commit credit card abuse rather than the behavioral manifestations of credit card misuse. SCCMI provides a new tool for marketers and public policy makers for ethically responsible credit card marketing and regulation to protect youths’ benefits.

The “Negative” Credit Card Effect: Credit Cards as Spending-Limiting st imuli in new Zealand

The “credit card effect” describes a finding where greater value is given to consumer items if credit card logos are present. One explanation for the effect is that credit cards elicit spending behavior through associative learning. If this is true, social, economic and historical contexts should alter this effect. In Experiment 1, Year 1 New Zealand university students valued consumer items less in the presence of credit card logos. Experiment 2 replicated this effect. These findings support the idea that New Zealand students” negative conditioning history with credit card stimuli results in a “negative” credit card effect, whereby credit cards limit rather than facilitate spending. This “negative” effect suggests that the presence or absence of a “positive” effect in previous studies depends on previous associations with credit card stimuli

Monopoly money: The effect of payment coupling and form on spending behavior.

This article examines consumer spending as a function of payment mode both when the modes differ in terms of payment coupling (association between purchase decision and actual parting of money) and physical form as well as when the modes differ only in terms of form. Study 1 demonstrates that consumers are willing to spend more when a credit card logo is present versus absent. Study 2 shows that the credit card effect can be attenuated when people estimate their expenses using a decomposition strategy (vs. a holistic one). Noting that credit card and cash payments differ in terms of payment coupling and form, Studies 3 and 4 examine consumer spending when the payment mode differs only in physical form. Study 3 demonstrates that consumers spend more when they are spending scrip (a form of stored value certificate) versus cash of the same face value. Study 4 shows that the difference in spending across payment modes (cash and gift certificates) is attenuated by altering the salience of parting with money through contextual manipulations of the differences between cash and gift certificates.

Effects of credit and debit cards on the currency demand

We analyze the effects of credit and debit cards on the currency in circulation by using GMM estimation. Instead of using the data obtained by surveys, we use monthly data obtained by an interbank institution that keeps the statistics of all credit and debit cards usage of a small open economy, Turkey, for the period over 2002M1–2006M10. As expected from the theory, we find that an increase in the usage of credit and debit cards leads to a decrease in the currency demand. Moreover, the usage of the debit cards has a bigger effect on the money demand, compared to the usage of the credit cards. We also find that the effect of credit cards is mostly through purchases and the effect of debit cards is mostly through withdrawals

Comment on McCall, Trombetta, and Gipe's 2004 Proposed Impression Management Explanation for the Credit Card Effect

There is a dearth of empirically supported theoretical explanation since its introduction; Feinberg's 1986 credit card effect showed greater product valuations and donation intentions by experimental participants when asked to make such estimates in the presence of credit card stimuli. This comment on McCall, Trombetta, and Gipe (2004) notes potential flaws and adjudged over-interpretation of results in their attempt to replicate successfully and derive theoretical explanation for the credit card effect.

Credit cues and impression management: a preliminary attempt to explain the credit card effect.

Prior research had suggested that individuals would estimate higher product values and even tip more in the presence of credit cues. In the absence of a clear theoretical interpretation of this credit card effect we propose that this tendency is an impression management strategy such that credit cue exposure influences perceptions of the self and focuses attention on individual wealth. Thus, in the presence of others, credit cues serve to enhance images of the self. Preliminary data in support of this alternative theoretical perspective are presented.

Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay

In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints. In addition to demonstrating the effect, we provide a methodology for detecting it, and our findings suggest a source of variance to test alternative explanations.

In Search of a Theoretical Explanation for the Credit Card Effect

Feinberg (1986) conducted a series of experiments in which he manipulated the presence or absence of credit card stimuli in context of experimental tasks requiring subjects to evaluate the worth of products, indicate how much they would be willing to donate to a charity, or to actually donate money. In all experiments, he detected that the mere presence of credit card paraphernalia led to greater valuations and donations. Feinberg proffered two theoretical explanations to account for his findings: classical conditioning and a weapons effect. These were merely conjectured rather than empirically tested. Hence, although Feinberg's research is well known to many consumer behavior scholars, his fascinating finding remains absent of a compelling theoretical explanation. Moreover, Feinberg (1990) himself and Hunt et al. (1990) have failed to replicate Feinberg's (1986) original findings. The purpose of the present research is to attempt to replicate Feinberg's (1986) results and also to test the theoretical explanations that he proposed. To this end, two studies were conducted. Study 1 tested the classical conditioning mechanism. Although this study obtained some support for Feinberg's original credit card effect, the results clearly reveal that classical conditioning is not the explanatory mechanism underlying this result. Study 2 tested the weapons effect mechanism. Findings from this study failed to replicate the credit card effect, thereby also rejecting the weapons effect as a suitable explanation for his original results.

Effect of stochastic income and credit cards on friedman's rule

Bewley [Em, 1983] conjectured that if uncertainty is introduced in Friedman's [The Optimum Quantity o f Money and Other Essays, 1969] model, deflation will exceed the rate of time preference, violating Friedman's rule. Taub [IER, 1989] showed that Bewley's conjecture is true if an economy is subject to an aggregate, stationary, autoregressive shock [see Mukherji, IER, 1992 for the corrected result]. The objective of this paper is to test the robustness of Taub's corrected result to changes in money's role. To this end, the cash-in-advance restriction is replaced by a credit card that delays payment in cash for an arbitrary period of time. This is an important exercise because cash-in-advance restrictions often qualitatively influence results. Consider an economy identical to that in Taub [1989]. Instead of cash, goods are bought with credit cards. Credit card bills arrive j periods later ( j is any positive integer) and are paid with money carried over from the previous period. Individuals derive utility from consuming the good and paying credit card bills in full, as indicated by the following utility function:

The Effect of Bank Credit Cards On the Household Transactions Demand for Money

In recent years monetary economists have displayed a small, but growing interest in the impact of bank credit cards on economic variables.l Of particular interest has been the question of the effect of credit cards on the demand for and velocity of money. Most economists believe that the money supply partially determines the level of economic activity. Changes in the demand for money due to the increased use of credit cards are likely to alter the linkage between the stock of money and other economic aggregates. This study serves to link theoretical models of the transactions demand for money to empirical observations on a cross-section of households in order to provide answers to the above question. At present, credit card usage varies widely across households; a considerable number of individuals have credit cards but are not active users. A cross-section study of households can be used to identify the relation between different levels of credit card usage and household demand for demand deposits. The results of the crosssection study can be extrapolated to describe potential money demand by households in a world where credit cards are widely used by everyone for transactions purposes. A number of plausible hypotheses can be proposed to describe the effect of credit card transactions on the household demand for money. One hypothesis is that active card users tend to hold higher average demand deposit balances than non-users.