Exploring the Effects of the Information Asymmetry on the Card-Debt Crisis
DOI:
https://doi.org/10.33423/jabe.v26i5.7291Keywords:
business, economics, information asymmetry, card-debt crisis, credit cards, adverse selections, moral hazardsAbstract
The article aimed to explore the effects of the information asymmetry on the card-debt crisis in Taiwan’s credit card market. The card-debt crisis of the credit cards broke out in Taiwan in 2005. To improve this situation, the financial authorities were forced to intervene in the market. The article employed the documents analysis and collected the related literature and statistical data to construct the information asymmetry model and the proposed hypotheses of the adverse selections and the moral hazards. The results concluded that the card-debt crisis did stem from the information asymmetry, and was alleviated by the intervention of the financial authorities.
References
Afzal, W., Roland, D., & Al-Squri, M.N. (2008). Information asymmetry and product valuation: An exploratory study. Journal of Information Science, 35(2). https://doi.org/10.1177/0165551508097091
Akerlof, G.A. (1970). The market for lemons: Quality uncertainty and the market mechanism. Quarterly Journal of Economics.
Arrow, K.J. (1963). Uncertainty and the welfare economics of medical care. American Economic Review, 55(1/2), 154–158.
Ausubel, L.M. (1991). The failure of competition in the credit card market. American Economic Review, 81(1), 50–81.
Brito, D.L., & Hartley, P.R. (1995). Consumer rationality and credit cards. Journal of Political Economy, 103(2), 400–430.
Chen, C., Liu, G.G., Wang, T.X., & Tan, J.L. (2023). Ex-ante moral hazard and health insurance: Evidence from China's urban residence basic medical insurance scheme. Health Economics, 32(11), 2516–2534. https://doi.org/10.1002/hec.4738
Gao, L.F., & Lu, Z.S. (2010). A study on investment risk of primary market: The perspective from the volatility of IPO returns. SunYat-Sen Management Review, 18(1), 211–249.
Holzapfel, J., Peter, R., & Richter, A. (2023). Mitigating moral hazard with usage-based insurance. Journal of Risk and Insurance. https://doi.org/10.1111/jori.12433
Hudson, P., & Berghäuser, L. (2023). Investigating moral hazard and property-level flood resilience measures through panel data from Germany. International Journal of Disaster Risk Reduction, 84, 103480. https://doi.org/10.1016/j.ijdrr.2022.103480
Lee, H.H., Hsu, M.Y., & Lee, C.Y. (2017). The construction of group injury insurance quality management system: Empirical study of property-liability insurance company in Taiwan. Journal of Quality, 24(1), 45–59. https://doi.org/10.6220/joq.2017.24(1).04
Lin, Y.F., & Sun, X.F. (2005). Information, informal finance, and SME financing. Economic Research, 7, 35–44.
Liu, Y.C. (2007). The behavior of the interest rate for credit cards in Taiwan's banks. Economic Research, 43(1), 35–64. https://doi.org/10.29765/TEI.200701.0002
Lu, J.C., & Zhang, R.X. (2016). Game analysis to prevent enterprise adverse selection in the initial allocation of carbon emission rights. Journal of Beijing Institute of Technology (Social Sciences Edition), (4), 28–35. https://doi.org/10.15918/j.jbitss1009-3370.2016.0404
Marc, C.M. (2024). Moral hazard with network effects. arXiv:2406.11660. https://doi.org/10.48550/arXiv.2406.11660
Mester, L.J. (1994). Why are credit card rates sticky? Economic Theory, 4, 505–530.
Mishra, D.P., Heide, J.B., & Cort, S.G. (1998). Information asymmetry and levels of agency relationships. Journal of Marketing Research, 35(3). https://doi.org/10.1177/002224379803500301
Neudeck, W., & Podczeck, K. (1996). Adverse selection and regulation in health insurance markets. Journal of Health Economics, 15(4), 387–408.
Pernell, K., & Jung, J.W. (2023). Rethinking moral hazard: Government protection and bank risk-taking. Socio-Economic Review, 22(2). https://doi.org/10.1093/ser/mwad050
Pierret, L., & Howarth, D. (2023). Moral hazard, central bankers, and Banking Union: Professional dissensus and the politics of European financial system stability. Journal of European Integration, 45(1), 15–41. https://doi.org/10.1080/07036337.2022.2156501
Poth, S., & Selck, T.J. (2009). Principal-agent theory and artificial information asymmetry. Politics, 29(2), 137–144. https://doi.org/10.1111/j.1467-9256.2009.01349.x
Pozdena, R. (1991). Why banks need commerce powers. Economic Review, Sum, 18–31.
Qi, J.Y., Wang, Y.J., Shi, B.Z., & Sheng, D. (2011). Financial development and export technology complexity. World Economy, 7, 91–118.
Qiu, Z.X., Wang, S.Y., & An, S.Y. (2014). Research on the adverse selection problem in constructing the deposit insurance system in my country. Teaching and Research, 48(11), 47.
Suciu, M.C., Drăgulănescu, I.V., Brătescu, A.G., Picioruş, L., & Imbrişcă, C. (2011). Universities' role in knowledge-based economy and society: Implications for Romanian economics higher education. Journal Amfiteatru Economic, 13(30), 420–436.
Wang, T.C., Tseng, Y.J., & Liu, C.W. (2008). An equilibrium analysis of auditor tenure and audit quality under asymmetric information. SunYat-Sen Management Review, 16(4), 631–669. https://doi.org/10.6160/2008.12
Wen, X.L., Chen, X., & Yang, Z.H. (2023). Subsidization of public transit service under double moral hazard. Statistical Mechanics and Its Applications, 632, 129304. https://doi.org/10.1016/j.physa.2023.129304
Widarjo, W., Bandi, R., & Widagdo, A.W. (2020). Underpricing and intellectual capital disclosure: Evidence from Indonesia. Global Business Review, 21(6). https://doi.org/10.1177/0972150919857017
Zheng, Z.X., Li, H.Y., Feng, W., & Xie, Y.H. (2021). Research on customer complaint behavior in consumer real estate transaction process under information asymmetry factors. Chinese Journal of Innovation and Development, 5(2), 17–26. https://doi.org/10.30141/JID.202105_5(2).0002
