Study On The Credit Risk And Interest Rate Of Credit Card Based On Asymmetric Information

The credit card market has experienced the growth from nothing, especially in China, the credit card market boomed in recent years and credit card increased sharply. Inorder to contest for the card market,Banks used a variety of preferential policies and sale measures to raise the number of the credit card saled.The credit cards became diversity. As to the end of 2009, the number of the credit cards issued has reached 185.5556 million. Cards convenience people's lives by eliminating the trouble of carrying cash and the function of overdrafe. People,especially the young white-collar owners,began to use more and more credit cards. Spending with credit cards has became a trend. But risk of credit card also accumulated, especially because banks in order to grab the market, no review has done before giving the applicant credit card.The rate of bad loans incresed and the normal business of banks was threated potentially.In order to explore the hidden dangers existented in China's credit card market,this paper studies the history of credit cards, especially the credit risk of United States, Japan, Korea, Taiwan and other countries and regions. This paper analyzed the source and th cause of credit risk.The emphasis of analysis is adverse selection-one of the reasons of credit risk.Through the statement of the theory of asymmetric information, this paper analysed the adverse selection between the banks and credit card holders because of information asymmetry. This behavior caused moral hazard in cardholders. Then this paper analysed the overdraft interest rate of credit card in further,in order to esplore whether adjusting the risk of credit card to promote the sound development of the credit card market.These theories have already attracted attention and been explored in the domestic scholars.But this article expected through a new angle, using the calculation method of experimental,studing this issue. This article used Netlogo software,programmed and designed adverse selection model.This model simulated the mutual behavior of banks and customers.The risk of banks can be observed through the simulation of interaction.We can also see if the risk of banks decreased when we adjust the interest rate or use a flexible interest risk.