Brian Hecht

Degree Type

Honors Capstone Project

Date of Submission

Spring 5-1-2006

Capstone Advisor

Professor Mary Lovely

Honors Reader

Professor John Yinger

Capstone Major


Capstone College


Audio/Visual Component


Capstone Prize Winner


Won Capstone Funding


Honors Categories

Social Sciences

Subject Categories

Economic History | Economics | Income Distribution | Other Economics


This paper examines the consumer credit card market in theUnited Statesto determine what factors, race and gender specifically, influence interest rates available to consumers. Data from the 2001 Survey of Consumer Finances is used to model the credit card market and answer the questions: All else being equal do women have higher credit card interest rates than men? Do blacks or Hispanics, all else being equal, have higher credit card interest rates than whites?

The paper provides background on the credit card market and its growing importance, reviews key literature on the role that discrimination can play in different lending markets and looks at methods for evaluating the credit card market previously developed by other economists.

A rationale is outlined for how supply factors and demand factors interact to form the equilibrium interest rate that different consumers have. A rich set of controls are used to take into account the information that lenders have about borrowers when issuing credit cards and interest rates. The model also considers the attitudes and behaviors of different borrowers when seeking an interest rate. A tobit model is used to determine the weights, influences and importance of the different controls, of race and of gender.

By considering personal characteristics, financial characteristics and personal attitudes it is then seen whether race or gender are statistically significant factors that contribute to the interest rate that a consumer has.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.



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