| Over the past 20 years, the global credit card industry has been showing a rapid growth trend. With the development of China’s economy, the credit card industry will also play an increasingly important role in the country’s economic and social life. Besides, with its high profit industry and strategic role in maintaining high-value customers, the credit card industry has become a more and more important profit-creating business. On the other hand, more and more foreign and joint banks are entering Chinese credit card market and other bank card markets, which has made the domestic credit market more competitive. However, at present the overall competitive strength of Chinese credit card industry is still weak, with all of its indicators far behind those of the developed countries. Therefore, to understand credit card products theoretically and propose proper policy suggestions is of great significance to the healthy development of Chinese credit card industry and the ordered operation of Chinese financial industry.This paper then gives a theoretical analysis of the credit card industry from the economic perspective, provides a preliminary discussion of the problems in Chinese credit card industry, and systematically summarizes the experiences of the credit card industry in some developed countries and the lessons from the major financial crises in human history, based on which some suggestions are proposed for the reference of concerned agencies.In accordance with the logic of "propose problems--analyze problems--solve problems", this paper is divided into the the following three parts:Part I proposes problems, corresponding to the Chapter One. It gives an introduction of the credit card industry, provides an overview of its development and then summarizes the three major problems currently existing in Chinese credit card industry. That is:(1) the rationality of the pricing for credit card service is being challenged, with the concerned interest groups hard to reconcile; (2) the amount of overdraft of credit card has been increasing slowly, with a high proportion of "sleeping card"; (3) the credit cards begin to impose negative monetary effects, with more and more serious cashing out with credit cards.PartⅡanalyzes problems, corresponding to Chapter Two, Three and Four, which provide analyses of the above three problems respectively.Firstly, this paper analyzes the above first problem from the perspectives of the interest conflicts between banks and merchants and the game between customers and merchants. Based on the introduction of the inter players, the mechanism and the "two-sided market" characteristic of credit card industry, this paper builds and solves a simple two parts game model, which justifies the necessity of interchange fees. Since most of the existing related researches focus on merchants instead of customers, this paper builds an analyzing framework which includes the network utility of customers. After constructing and solving a social welfare function, this paper finds that, after the introduction of customers’network utility into the determination of interchange fee, the maximum social welfare depends not only on the level of interchange fee, but also on the distribution of such a fee between customers and merchants. Based on this result, this paper proposes that we should pay more attention to the distribution of interchange fee than to the level of such a fee when trying to solve the conflict between inter players in credit card industry. Then, this paper treats the issuing bank, the acquiring bank and the bank card organization as a whole bank system and calculates the profit of this system. After imposing the non-negative condition of this profit, this paper finds that high merchants’discount rate isn’t due to the unfair interchange fee, but to the over high costs of banks and over low card fees, which root from the inefficient structure of Chinese bank cards, the less developed card environment and the vicious competition existing in the credit card market.To analyze the game between customers and merchants, this paper make the existing static game model dynamic and then proposes a multi-party dynamic game model to examine the behaviors of customers and merchants under the conditions of ever increasing facility of consuming with cards and the ever decreasing of the searching cost. Based on the above analysis and the first Chinese credit card service index issued in March 2009, this paper points out the possible methods to raise the facility of consuming with credit cards, which include:re-choose more effective communicating channels to completely and thoroughly introduce all the functions (especially the overdraft function) of credit cards; substantially add the kinds and greatly enhance the quality of supplementary services such that the diversified demands of customers are satisfied; shape the characteristics of high-level credit card service and enhance the quality of high service; continue to open automatic paying back, online transferring, phone banks’transferring and other services to make the paying back of credit card easier.Secondly, this paper analyzes the above second problem from the perspectives of the significance of credit card consumption on economic growth, the contributing factors of credit card consumption, and so on. After introducing the theoretical bases and the characteristics of credit card consumption, this paper studies the relationship between credit card consumption and economic growth based on the aggregate demand analysis model, which justifies the importance of credit card consumption on economic growth. Next, based on "precautionary saving theory" and some other theories on consumer behaviors, this paper adds some variables which have been ignored in previous researches to the regression model. Using the basic data on the bank card businesses in the four quarter of 2005, this paper regresses the amount of credit card consumption, which is then found to be significantly positively correlated to income and amounts of ATM, while significantly negatively correlated to the expected expenses (measured by the RMB deposit balances). Besides, this paper calculates the VIF values of the above regression, and finds its independent variables to be highly correlated. A second regression without the variable of "the amount of cooperating merchants" is thus conducted and consistent results are obtained, which indicates that the regression results in the first regression are robust. Based on these, this paper further points out that the slowly increasing incomes of farmers, the ever widening income gaps, the high expected expenses, the low ATM coverage and the improper promoting strategies all directly reduce the consumption amount and overdraft amount, which then results in the huge increase of "sleeping cards".Thirdly, this paper analyzes the above third problem from the perspectives of money supply and demand, the seigniorage revenues of central banks, the monetary policies, the regulation holes, and so on. The analysis of money supply shows that the use of credit cards will reduce the amounts of base money including currency, required deposit reserves and extra deposit reserves, and raise the money supplier, which combine to result in the increase of money supply. The analysis of money demand shows that the wide use of credit cards will greatly reduce the transaction costs of transforming money among its various uses, diffuse the differences between various money demands, and accelerate the circulation of money, which smooths the fluctuations of money demand and shortens the floating durations. Besides, the use of credit cards will also reduce the seigniorage revenues of central banks, weaken the effects of monetary policy tools and raise the liquidity risk and credit risk in financial system. Furthermore, this paper analyzes the mechanisms, effects and causes of cashing with credit cards, and finds that the fundamental causes for the problem of illegal cashing lie in the absence of related laws and regulations, and the scanty formal financial channels. Therefore, it is imperative to accelerate the building of related laws and regulations, make the punishments for illegal cashiers more severe and formalize the issuing and management of POS. In addition, we should spare no efforts to develop our finance industry and take various measures to ease the financing of family, medium and small firms in order to eliminate the illegal cashing.Part III solves problems, corresponding to Chapter Five, Six and Seven.Firstly, this paper conducts a comparative research on the experiences of the credit card industries in the representative countries, from which some useful lessons are summarized. In the USA, the origin place of credit card, the development of credit card industry has been mainly pushed forward by market powers, which is characterized by an extremely important role of bank card organization and a perfect judicial environment provided by the specialization of the credit card industry and government agencies for risk avoiding. In Japan, which has the second largest credit card industry, its government had been implementing a strict control over its credit card industry until the 1990s of 20th century, when the Japanese government tried to solve the vicious debts of the bank industry. Since then, the Japanese credit card industry has been developing rapidly. However, it has a high the fraud rate due to the relatively high communication cost in Japan, and also has little scale economy effect due to the strict control on the merging of retailers and the many closed settling organizations in Japan. In South Korea, although the interventions and favourable policies from its government have promoted the development of its domestic credit card industry, its government fails to provide a perfect judicial environment. In addition, its credit card firms hadn’t paid enough attention to risk controls during the extraordinary expansion process, which resulted in a major setback in the development of the credit card industry. In some South America countries like Argentina and Brazil, the domestic governments over-opened their doors to foreign capitals, which made their national industries degenerate to the slaves of the global market. In comparison, some southeast Asian countries like Thailand and Malaysia have successfully balanced the opening to foreign capitals and the protection of their national credit card industries, the experiences of which possess a high value of learning.Secondly, this paper analyzes and summarizes the financial crises. Since financial crises are credit crises to a large extent, the lessons from the major financial crises in human history possess a great value to learn for the development of Chinese credit card industry. This paper briefly overviews and analyzes the Latin America debt crisis, the Asian financial crisis and the USA supreme crisis. To account for the characteristic of the USA subprime crisis, this paper gives a particular analysis of its impacts upon Chinese credit card industry, and finds that the current suprime crisis may pose a deadly impact on American credit card industry, while the impact on Chinese credit card industry is still within control. However, this paper points out that it’s also necessary for our Chinese people to draw lessons from the major financial crises. These lessons include:from the perspective of industrial guidelines, it’s imperative to correctly understand the relation between real economy and fictitious economy, and keep the credit economy within our control; from the perspective of card issuing organizations, it’s imperative to build and improve a risk management system, strengthen the checking of credit card customers, keep the business innovations within a proper limit and build a risk warning system; from the perspective of government, it’s imperative to build a well-functioning industry regulation system, propose and enhance corresponding law and regulation measures, correct the wrong promotion activities of credit cards from various aspects, prohibit the illegal activities in credit card markets and promote the healthy development of credit card industry.Finally, this paper proposes some policy suggestions to promote the development of Chinese credit card industry. Suggestions from the macro perspective of industry include:to strengthen the judicial supervision and various supports from the government, provide a perfect judicial environment and implement some necessary favourable policies; to guide the credit card markets more effectively and to form a properly competitive and cooperative operating atmosphere; to lead build and enhance a social credit system, improve the risk avoiding ability of credit card industry and enlarge its scale such that scale economy effect can be achieved; to promote business innovations by scientific technologies, properly introduce foreign capitals and promote the healthy development of our national credit card industry. Suggestions from the micro perspective of agents include:to lead the rational marketing of issuing banks, cultivate the sense of initiative service and strengthen risk control; to strengthen the building of national bank card organization and bring the professional service organization to its full play; to improve the receiving environment of Chinese credit cards, and make the merchants gain profits in a comfortable and rapid payment system; to guide the transition of concepts on individual consumption, and strengthen the sense of individual credit. |
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