Reexamine the Role of the Financial Institution Management During Card Debt Crisis or the COVID-19

Abstract

Due to the increasing popularity of financial technology and the lifting of financial regulations, various financial institutions have become increasingly competitive and actively expand their consumer finance business. Changes in generational consumption behaviour have led to excessive credit expansion, excessive debt or bad credit records. All of these result in the emergence of adverse selection and moral hazard problems of information asymmetry, and finally cause the card debt crisis in 2005. This article focuses on variables such as the number of cards in circulation, retail sales volume, revolving balance, and overdue ratios of credit cards in public and private banks, and examine whether the information asymmetry in the credit card market has been improved, with the financial institution management. Furthermore, due to the COVID-19, exploring whether the information asymmetry has been worsened or improved deserves the attention of the financial authority again. The results reveal that continuous financial institution management is very important and effective during the card debt period or the pandemic.