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The Failure of Price Competition In The Turkish Credit Card Market

Guzin Akin (), Ahmet Aysan, Gazi Kara () and Levent Yildiran ()

MPRA Paper from University Library of Munich, Germany

Abstract: The failure of competition and the consequent high and sticky interest rates in credit card markets have been the subject of a considerable amount of debate and research lately. This paper presents the first regression testing for the existence of price competition in a credit card market to be estimated free of dynamic panel bias using recent quarterly data from Turkey. The estimation reveals that even though the effect of the cost of funds on credit card rates is statistically significant, it is very weak. The paper thus provides empirical evidence for the failure of price competition in the Turkish credit card market.

Keywords: Credit Cards; Price Competition; System GMM; Banking (search for similar items in EconPapers)
JEL-codes: G2 D4 G21 D14 (search for similar items in EconPapers)
Date: 2008
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