Essays on consumer credits and bank choice

Abstract

This thesis consists of two essays. In the first essay, I investigate the relationship between credit card borrowing and using consumer credit using a very recent survey data set. Formal borrowing is a new concept for Turkish households; however, borrowing through credit cards became very prevalent in 2000s. I investigate whether credit card borrowing paves the way for consumer credit usage by looking at the effects of being a revolver credit card user as well as other personal characteristics on taking consumer credit. The results indicate that being a revolver credit card user increases the likelihood of using consumer credit, since credit card borrowing creates a formal borrowing habit. In the second essay, I empirically analyze individuals’ bank selection in Turkey using the same data set. After the 2001 crisis, regulations in the banking sector, and improvements in the macroeconomic performance of Turkey started a new period for both customers and banks. Thus, the motivation of this chapter is the investigation of the factors affecting individuals’ bank selection after these regulations and macroeconomic improvements. Results indicate that public banks are preferred mainly due to people’s wages being deposited at these banks. Having a branch and ATM density preference increases the probability of choosing large private banks. Furthermore, individuals who are concerned about the ease of obtaining credit choose small private banks. Interest rates for deposits and credits are not important in bank selection any longer and that is a critical change that differentiates the new period from the previous one.