EVENT STUDY ANALYSIS OF CONSUMER BEHAVIOR: EVIDENCE FROM CREDIT CARD SPENDING IN KOREA
Seok, Young Hwa
This dissertation uses proprietary credit card data to investigate the impact of several shocks on consumer’s spending behaviors. The shocks studied consist of a regulatory shock initiated by the Korean government, an emotional shock from a human-made calamity, and a security shock stemming from a high-profile information security breach. Chapter 1 introduces the motivations behind this dissertation and gives a summary of each chapter. Chapter 2 discusses the regulatory shock. In South Korea, credit card holders can subscribe to a messaging service that sends a cell phone text message whenever a credit card purchase is made. Since September 2012, Korean policymakers have required that these text messages also include information on unpaid debt balances. Comparing credit card spending by users who subscribe to this messaging service and by users who do not shows that reminders of unpaid debt balances reduce credit card spending by 1%, past due balances by 0.5%, and installment purchases by 0.5%. These findings suggest that simple reminders of unpaid debt balances can lead to more responsible spending. Chapter 3 examines the effect of social grief on credit card spending. In April 2014, a South Korean ferry carrying 476 people, mostly secondary school students from the city of Ansan, capsized, leading to 304 deaths in a disaster that devastated the entire country. This research finds that spending decreased dramatically after the disaster, especially among people living in Ansan. These findings suggest that social grief can reduce consumer spending. Chapter 4 explores the effect of the high-profile information security breach on consumer credit card spending. On January 8, 2014, Korean regulators announced that the details of 104 million credit cards had been stolen, affecting nearly 20 million individuals. This research finds empirical evidence that such a massive information security breach increases the likelihood of account cancellation and reduces the use of the compromised credit card. Chapter 5 concludes with a summary of main findings of the dissertation and suggests directions for future studies on consumer behavior.
Economics; Credit Card
Hwang, Byoung-HyounNg, David T.
Applied Economics & Management
PHD of Applied Economics & Management
Doctor of Philosophy
dissertation or thesis