Credit cards and their impact on the development of the banking sector: The case of Egypt.

摘要

The main objectives of the study are to describe the development of the credit cards worldwide, in the Arab countries and in Egypt as well as to show that the credit cards business for Egyptian banks has high profitability and low risk. This is important for banking policy makers as a kind of assessment of retail business which has been introduced in Egypt by the end of the 1990s, and can increase the liquidity in banks, ability of lending, levels of investment, levels of production and consumption, and finally GDP.; The major research question was: "Has the application of credit cards affected the Egyptian banking performance?"; The minor research questions were: (1) "Has the use of credit cards led to increased banking profitability?" (2) " Has the use of credit cards led to lower banking credit risk? "; The hypotheses, which addressed the research questions and therefore were being tested against empirical data, were that: major hypothesis. " Credit cards have impact on banking performance." minor hypotheses: (1) "Credit cards have impact on banking profitability ." (2) "Credit cards have impact on banking credit risk."; This research is a triangular research, which mixes quantative and qualitative methodologies. The research project went through two phases: (1) The first phase set out to identify the credit cards variables to be tested. A number of meetings as well as interviews were conducted with banking sector in order to obtain better understanding of credit cards business and its operation in Egypt. As well as several meetings were held with specialists from Visa International and MasterCard to acquire the development of the e-payment worldwide and in Arab region, then define the rank of Egypt among them. Having gained good qualitative results through these meetings and through the literature review and empirical case studies, it was necessary to build a regression model to predict the relation between the credit cards and the banking profitability as well as risk. This model was tested before collecting the information required. (2) The second phase of the research project was collecting the information, which had taken a period of twelve months. Keeping in mind that one of the major constraints was getting information in a developing country, it was decided that the best way to reach the required data was by setting appointments with executive and top management in retail banking sector and carry out a tabulation form to be filled by their cards centers. These meetings were repeated several times according the information need of the research. This strategy proves to be useful for getting the required data, checking its accuracy across banks from different segments. For better analyzing and justifying the major findings of the research the regression results were shared with the banks included in the sampling to get their feedback. Finally, this research is new in Egypt and was not conducted before.; The main findings: (1) The number of credit cards has impact on Banking Profitability. (2) The number of credit cards has impact on Banking Risk. (3) The banks should review their current policies for setting provisions for Bad debts from credit cards. (Abstract shortened by UMI.)