Eesti Panga teaduspreemia 2018. aasta laureaatide võidutööde tutvustus

1. The determinants of credit
card ownership and
outstanding balance
Janely Põllumägi
Supervisor: professor Kadri Männasoo
28.11.2018

2. The goal of this thesis was to identify potential
credit card customers and factors that determine
outstanding balance in Estonia

3. Empirical analysis was based on Heckman model,
which was estimated by:
• Original 2-step method
• Maximum likelihood method
• 2-step method that uses heteroskedastic probit
model in the first step

4. Main conclusion is that average credit card user
differs from average owner of outstanding balance:
 Outstanding balance starts decreasing after 40-41
years, while probability of having credit card
increases until age 56
 Selection bias exists: unobserved factors that
make having credit card more likely tend to be
associated with lower outstanding balance

5. Some more conclusions:
 Better education increases probability of owning credit card but decreases
outstanding balance amount
 POS transactions and online shopping have positive relation with probability of
owning credit card but rather insignificant correlation with outstanding balance
 Customers, who travel, are more likely to own credit card and have
outstanding balance
 Customers, who have credit card and use limit, are more likely to have other
liabilities as well (consumer loan or mortgage)
 Liquid assets amount decrease the probability of credit card ownership and
outstanding balance amount

6. Thank You!