6533b7d9fe1ef96bd126c03e

RESEARCH PRODUCT

Is the cardholder an efficient alarm system to detect credit card incidents?

Jose M. PavíaErnesto J. Veres-ferrer

subject

MarketingEconomics and EconometricsActuarial sciencebusiness.industryComputer science05 social sciencesPublic Health Environmental and Occupational HealthComputer securitycomputer.software_genre01 natural sciencesElasticity of a functionRisk perception010104 statistics & probabilityALARMCredit cardIssuer0502 economics and businessRisk Control050211 marketing0101 mathematicsbusinesscomputerApplied PsychologyRisk managementCredit card interest

description

There is a growing tendency in credit card industry to increase the contribution of the smallest players, the cardholders, in the detection of card incidents. This article examines whether cardholders are efficient at detecting/communicating incidents of theft, loss or fraudulent use of their cards. The analysis focuses on whether they demonstrate enough speed of response to support a risk control subsystem by the issuer. The research follows a completely new approach showing how the issue can be handled by applying the concept of elasticity, a notion just recently exported from economics to the field of statistics by linking it with the reverse hazard rate. The issue is focused on the analysis of the characteristics of the elasticity function of the random variable that measures the delay of cardholders in reporting incidents. This study is illustrated with an application to a real data set of 1069 incidents.

https://doi.org/10.1111/ijcs.12246