Why Do Banks Reward Their Customers to Use Their Credit Cards?

Why Do Merchants Accept Credit Cards?

In this article, we investigate why merchants accept credit cards for payment despite the relatively high cost of processing these types of transactions. A two-period model is constructed to determine under what conditions a credit card equilibrium would exist. The results of the model indicate that when the cost of funds is not too high and when the merchant’s profit margin is sufficiently hig...

Anonymous Credit Cards and Their CollusionAnalysisSteven

| Communications networks are traditionally used to bring information together. They can also be used to keep information apart in order to protect personal privacy. A cryptographic protocol speciies a process by which some information is transferred among some users and hidden from others. We show how to implement anonymous credit cards using simple cryptographic protocols. We pose, and solve,...

Using Credit Cards to Streamline the Use of Resources

How much do banks use credit derivatives to hedge loans?

Before the credit crisis that started in mid-2007, it was generally believed by top regulators that credit derivatives make banks sounder. In this paper, we investigate the validity of this view. We examine the use of credit derivatives by US bank holding companies with assets in excess of one billion dollars from 1999 to 2005. Using the Federal Reserve Bank of Chicago Bank Holding Company Data...

Why do Banks Fail ?

Banks advance loans in the absence of precise knowledge in relation to the outcome of borrowers’ projects. Consequently, uncertainty in relation to loan repayment emerges. Thus, banks introduce the ‘credit standard’ as insurance against loans, so that should borrowers’ projects fail, borrowers have an alternative means of honouring their debt obligations. It is argued in this paper that in the ...