Consumer Credit Risk Characteristics: Understanding Income and Expense Differentials

Posted: 6 Oct 2012

See all articles by Ozgur Arslan-Ayaydin

Ozgur Arslan-Ayaydin

University of Illinois at Chicago

Mehmet Baha Karan

Hacettepe University - Department of Business Administration

Date Written: 2010

Abstract

This study investigates the consumer credit risk characteristics of Turkish households by analyzing factors related to their income and expense differentials. This study assumes that the income and expense patterns are the key elements of consumer credit risk. Based on a data set ranging from 8,551 to 25,566 households, during the period 2003-5, we employ a logistic regression method to model the determinants of income and expense differentials. We first concentrate on the income-expense balance of households to highlight those that are eligible for consumer credit. We reinforce our results by further analyzing the expenditure behaviors of households to find those that should be either primarily eliminated or targeted for consumer credit by financial institutions. Our overall results provide evidence on the factors identifying household income and expense profiles and, hence, consumer credit risk characteristics of Turkish households.

Keywords: Consumer Credit, Credit Risks, Logistic Regressions, Turkish Households

JEL Classification: G30

Suggested Citation

Arslan-Ayaydin, Ozgur and Karan, Mehmet Baha, Consumer Credit Risk Characteristics: Understanding Income and Expense Differentials (2010). Emerging Markets Finance and Trade, Vol. 46, No. 2, 2010, Available at SSRN: https://ssrn.com/abstract=2157774

Ozgur Arslan-Ayaydin (Contact Author)

University of Illinois at Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States
++1 312 355 0886 (Phone)

Mehmet Baha Karan

Hacettepe University - Department of Business Administration ( email )

Beytepe Campus
Ankara, 16800
Turkey
+903122978700 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
736
PlumX Metrics