An empirical investigation of credit card users in China

Abstract

Since the first credit card issued by the Bank of China in 1985, the domestic banks has issued 140 million credit cards in 2008, and by the end of 2011, the total number of credit cards issued reached 285 million, an increase of 24.3% from 2010. Further, 79.41% of the consumers have more than 3 credit cards, 35.12% have only one credit card while 1.35% have more than 10 credit cards. The total transaction reached 756 million RMB, which was 47.95% higher than the transaction volume in 2010. The number of the domestic credit card merchants has increased at the end of 2011 and the number of domestic acceptance merchants reached 3.18 million, a 45.68% increase compared to 2010 (Peng, 2012). This paper seeks to investigate the factors that influence consumers’ decision to use credit cards and level of credit card limit. In particular, this research seeks to determine which consumers’ characteristics have the greatest influence on the respondents’ decision to have a credit card. For example, as the age increases, does the probability of consumer to holding a credit card decrease? The results show convenience, interest rate, application process, size of household, reward program, marital status, credit limit and age impact the respondent’s likelihood of owning a credit card. Further, the results show the number of credit card, credit card use duration, monthly spending, and bachelor degree are statistically significant and positively related to different levels of credit limit.