Search Conferences

Type in any word, words or author name. This searchs through the abstract title, keywords and abstract text and authors. You may search all conferences or just select one conference.

 All Conferences
 EMAC 2019 Annual Conference
 EMAC 2020 Annual Conference
 EMAC 2020 Regional Conference
 EMAC 2021 Annual Conference
 EMAC 2021 Regional Conference
 EMAC 2022 Annual
 EMAC 2022 Regional Conference
 EMAC 2023 Annual
 EMAC 2023 Regional Conference

EMAC 2020 Regional Conference

What Explains Credit Card Delinquency: Mental Accounts or Rational Financial Planning?

Published: September 16, 2020


Håvard Huse, BI Norwegian Business School; Sven Haugland, NHH Norwegian School of Economics; Auke Hunneman, BI Norwegian Business School


mental accounting; credit cards; hierarchical Bayesian logit


This study proposes a model of credit card delinquency based on advances in mental accounting. Using a comprehensive dataset combining credit and debit transactions, three hypotheses are supported. First, higher payment decoupling increases probability of delinquency, when continued borrowing is promoted by reduced salience of past expenses. Second, behavior consistent with decision-making ineptitude also increases probability of delinquency; some cardholders habitually spend in excess. Third, a lower concern for future consequences also increases probability of delinquency; present-biased individuals discount future repayments at a higher rate. The proposed model approximates behavior realistically, while inspecting the validity of the theoretical concepts.