Do Thai Credit Card Consumers Have Self-Control?
Journal Title: Thammasat Review of Economic and Social Policy - Year 2017, Vol 3, Issue 2
Abstract
The use of credit cards has been popular in Thailand for several decades. As its popularity increases, policymakers and the public have expressed concerns over the credit card debt. With the panel dataset from the National Credit Bureau, this study is able to explore whether Thai credit card consumers, on average, have self-control in terms of credit card utilization rate. Under the theoretical framework of Life Cycle Hypothesis and the theory of self-control in behavioral economics, the effects of demographic variables, life stages, time of the year and the economic outlook are investigated in this study. From the Panel Random-Effects Tobit regression, the main results indicate that Thai credit card consumers statistically have partial self-control. However, they begin to lose self-control when they (i) have too many credit cards, (ii) fall into the ‘illusion of income’, (iii) have any additional type(s) of debt, (iv) spend in December and (v) become optimistic towards the economy in the future. To alleviate the loss of self-control in the short run, policymakers are advised to ‘build income walls’ and lock ‘one credit limit per one card issuer’ for all card holders. In the long run, self-control can be achieved through an appropriate financial habit formation with the aid of financial technology.
Authors and Affiliations
Niwarn Ponpunthin, Tatre Jantarakolica
Keywords
Related Articles
- EP ID EP553824
- DOI 10.14456/tresp.2017.5
- Views 121
- Downloads 0
Financial Regulation as an Adjustment Screw in the Transformation of Global Capital Markets
Globalization is typically understood as a process embracing complex economic, technological, socio-cultural and political forces which leads to progressive international integration at various levels. However, this incr...
Democracy and Growth: Global Causal Evidence for Heterogeneous Political Regimes and Economic and Social Policy
The relationship between democracy and growth is of great importance to development of economic and social well-being policy but its directional causality is still generating lively debate conceptually and empirically. T...
Income Elasticity for Medical Care Services: An Empirical Study in Thailand
The objective of this paper is to investigate the potential household income effect on public and private health care choices for outpatient and inpatient services. A multinomial logit model on choice of health care serv...
Market Expansion, Political Relationship and Geographical Inequality in the Early Rattanakosin Siam: A Theoretical Perspective
This paper provides a simple theoretical model that explains a mechanism for which market economy might proliferate through various geographical locations in the early Rattanakosin Siam and its implication on locational...
Fiscal Decentralization and Intergovernmental Transfer in Thailand
Decentralization in Thailand occurred hastily and remains relatively untested after the promulgation of the 1997 Constitution. The decentralization act of 1999 mandated the government to transfer revenue to LAOs, reshapi...