Credit Cards

Credit Cards

Consumer revolving credit

The successful creation and trading of debt contracts is based on the premise that the probability of financial failure can be quantified and controlled for a portfolio of contracts. Trends in loan delinquencies and losses over time and among credit types contain important information for credit managers and market analysts involved in that activity. For example, in their study of the correlation of loss rates over time for various types of consumer and mortgage loans, Ford and Stanley 1985 concluded that savings institutions could reduce the probability of loan losses in their portfolios by diversifying into consumer ...