Credit Card Debt: Nescience or Necessity?

Guzin Akin (gulsun.akin@boun.edu.tr), Ahmet Aysan, Sezgim Dasdogen (ahmetaysan@sehir.edu.tr) and Levent Yildiran (levent.yildiran@boun.edu.tr)
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Sezgim Dasdogen: Department of Economics, Istanbul Sehir University

No 1315, Working Papers from Economic Research Forum

Abstract: This paper attempts to assess whether the driving factor behind the rising credit card indebtedness of consumers in Turkey is financial illiteracy. Using the results of a nationwide survey, the authors conclude that even though credit card borrowing frequency and debt amount are affected by components of financial literacy, being credit-constrained has a very pronounced impact. An exploratory analysis finds that the probability of irrational credit card borrowing is increased by being credit-constrained but not affected by financial literacy. These findings suggest that credit card debt is at least as much a result of necessity as nescience.

Pages: 28 pages
Date: 2019-08-21, Revised 2019-08-21
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-fle and nep-pay
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