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Working Paper
Automated Credit Limit Increases and Consumer Welfare
In the United States, credit card companies frequently use machine learning algorithms to proactively raise credit limits for borrowers. In contrast, an increasing number of countries have begun to prohibit credit limit increases initiated by banks rather than consumers. In this paper, we exploit detailed regulatory micro data to examine the extent to which bank-initiated credit limit increases are directed towards individuals with revolving debt. We then develop a model that captures the costs and benefits of regulating proactive credit limit increases, which we use to quantify their ...
Discussion Paper
The Effects of the COVID-19 Shutdown on the Consumer Credit Card Market: Revolvers versus Transactors
The consumer credit card market has experienced dramatic, unprecedented changes in the wake of the COVID-19 shutdown of the U.S. economy. Revolving credit in the G.19 Consumer Credit statistical release fell by an annualized rate of 32 percent in the second quarter of 2020.