Carbó, Chakravorti, and Rodriguez study the impact of lowering interchange fees on consumer and merchant adoption and usage along with bank revenues during a ten-year period in Spain using bank-level data. Using cutting-edge econometric techniques, they are able to test two-sided market model predictions about payment card pricing policies. They...
Payment cards continue to replace cash and checks in advanced economies. Along with the growth of payment card transactions has come greater scrutiny by public authorities of certain payment network rules along with the level of certain fees. Chakravorti reviews the growing payment card literature and discusses the impact of...
Chakravorti and To construct a two-period model to study the interactions among consumers, merchants, and a card issuer. The model yields the following results. First, if the issuer's cost of funds is not too high and the merchant's profit margin is sufficiently high, in every equilibrium of our model the...
Credit cards provide benefits to consumers and merchants not provided by other payment instruments as evidenced by their explosive growth in the number and value of transactions over the last 20 years. Recently, credit card networks have come under scrutiny from regulators and antitrust authorities around the world. The costs...
Over the last decade, consumers have tripled their use of credit cards as more merchants have increased their acceptance of them. This increase suggests that incentives in today’s marketplace favor greater credit card use by consumers and acceptance by merchants. In this paper, Chakravorti and Shah study the set of...
Chakravorti studies systemic risk in multilateral net settlement systems is investigated using a four-period model. The model focuses on the tradeoff between systemic risk and the cost of interbank transfers along with the importance of the overnight money markets that were a key factor in the most recent financial crisis...