An empirical study for credit card approvals in the Greek banking sector

Contents Introduction The new economy in the information society creates a new business environment. What is different is that more and more business gets transacted in a computer-mediated environment. Transactions, bill payments, purchasing, reservations (hotels, travel or cinema tickets) are done electronically. A Credit Card is an electronic payment system that is used more than two decades. During the last two decades, credit cards have become one of the main ways for executing financial transactions. Credit cards constitute the largest part of individual financing. Their success is owed to the fact that after the issue of the card and the determination of the credit limit, the owner is free to charge and sometimes to overcharge whenever he wants the predefined limit Introduction Although there are few credit card networks-Visa, MasterCard and American Express are the three largest ones-the number of commercial banks offering credit cards affiliated with these networks has been reported as roughly 4000 during the 1980s (Ausubel, 1991) and 6,000 during the 1990s (GAO, 1994). Thus, a wide range of credit cards are present in the market, issued by a number of banks or by different financial institutions. Managing credit cards is a complex business. A factor that contributes to this complexity is that credit card customers use their cards for a number of non credit reasons, namely: payment convenience, smoothing of finances, paying regular bills, emergencies and spontaneous spending. The cost of using a credit card instead of money relates to a high interest rate that must be paid at the end of each period on balances debited to the card within previous period.