Evaluating the Efficacy of Credit Card Regulation

Document Type

Article

Publication Date

2005

Department

School of Business

Abstract

In the USA, the Federal Reserve Board (FRB) has adopted a final rule amending the Truth in Lending Act's Regulation Z, effective October 1, 2001. The present study aims to use the elaboration likelihood model to explore how consumers might respond to the revised credit card disclosure requirements, focusing specifically on college students. Each subject was randomly assigned to one of two financial scenarios and asked to choose, among competing offers, the credit card that presented the "best" match to the scenario. Subsequently, all subjects completed measures designed to test hypothesized relationships within the framework of the elaboration likelihood model. College students possess a fairly low level of knowledge of credit cards and thus are not very well equipped to make educated choices concerning such cards. The present research is the first to investigate the impact of the FRB's recently adopted final rule amending the Truth in Lending Act's Regulation Z. The findings should thus be of interest to regulators, credit card issuers, and consumer advocates.

DOI

DOI:10.1108/02652320510591702

First Page

237

Last Page

254

Volume

23

Issue

2/3

ISSN

02652323‎, 17585937‎

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