Study On The Personal Credit Card Risk Under Asymmetric Information

As the product in the information period,credit card has been anindispensable tool for consumption paying in people’s daily life.And with therapid deveopment and expansion in banking, the number of cards issued in ourcountry has grown exponentially.The circulation bulge caused by the expansionin banking further stimulated the potential risk source, then aggravated thepersonal credit risk. Study on the credit risk has gotten more and more attentionsform many scholars in recent years.It has an very important value for banks tocontrol risks,save operation cost and improve profits that understanding thecauses of credit risk and building credit risk evaluation system effectively. At thesame time,it does good to ensure our financial system operates effectively andachieves the sustainable development of the finance industry.This paper discusses the adverse selections and moral hazards in credit cardbusiness on the base of the asymmetric information theory,and analyzes creditrationing effect and losses under asymmetric information.Then it describes thecauses of the personal credit risk in four aspects,which are the issuers and thecardholders, issuers and their staffs, issuers and issuers,issuers and governmentministry.At last,it continues to discuss the factors and formation mechanism ofcredit card risk from macro and micro levels separately. On this basis,it identifiesvariables and constructs the Logistic-AHP personal credit risk assessment model.This paper selects sample variables with Logistic regression firstly in theempirical analysis.And it designs credit scoring criteria with the reference ofweights of each variable determined by AHP. After predicting the number ofdefault samples with the calculation of score, it shows the effectiveness of theLogistic-AHP model by the prediction precision. Finally the model resultsindicate that the company,income,and position are the most important factors inrisk assessment.This paper makes suggestions that banks should update customerinformation timely and strengthen the integrity education to cardholders.What’smore,the conclusion provides a certain reference for banks to adjust ratingsystem and define key issues.