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

Additional URL

https://doi.org/10.1016/j.jmoneco.2018.02.005

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