The Usage of Credit Cards: An Empirical Analysis on Italian Households Panel Data

Abstract

Credit cards, both as mean of payment and borrowing, rise many economic issues. The credit card services can be viewed as a two-sided network platform affected by indirect network externalities. The distribution of prices faced by the two sides influences market participation and the overall volume of demand. Consumers may hold or use credit cards from multiple networks leads to a ‘multi-homing’ effect that is of great importance in determining the outcome of the industry. Moreover, some studies show that the multiple credit cards can be seen as a device to access to more financing, making family bankruptcy more likely. In this paper we model the number of credit cards held by a panel of Italian household over the period 1991-2010 using demographic, socio-economic and geographical variables as potential predictors and panel data techniques for count data. The reached results can be of interest for implementing market strategies in credit card industry and, in particular, to investigate peculiar effect such as “multihoming” and “co-holding”.

Keywords: Credit cards, Panel data, Count-data models