Publication Type
Journal Article
Version
publishedVersion
Publication Date
6-2018
Abstract
Using a unique panel dataset that contains comprehensive information about the relationships between a large bank and its credit card customers, we show that relationship accounts exhibit lower probabilities of default and attrition, and have higher utilization rates, than non-relationship accounts. Dynamic information about changes in the behavior of a customer's other accounts at the same bank helps predict the behavior of the credit card account over time. These results imply that relationship banking offers significant potential benefits to banks: information the lender has at its disposal can be used to mitigate credit risk on the credit card account.
Keywords
Relationship banking, Credit cards, Deposits, Investments, Household finance
Discipline
Finance and Financial Management
Research Areas
Finance
Publication
Journal of Monetary Economics
Volume
96
First Page
16
Last Page
32
ISSN
0304-3932
Identifier
10.1016/j.jmoneco.2018.02.005
Publisher
Elsevier: 24 months
Citation
AGARWAL, Sumit; CHOMSISENGPHET, Souphala; LIU, Chunlin; SONG, Changcheng; and SOULELES, Nicholas S..
Benefits of relationship banking: Evidence from consumer credit markets. (2018). Journal of Monetary Economics. 96, 16-32.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6505
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jmoneco.2018.02.005