Using account-level credit card data from a large Turkish bank, we study the impact of a unique credit card policy that increases minimum payment on consumption and debt repayment. We show that the policy reduces credit card spending and debt, boosts existing debt repayment, and reduces credit card delinquency. The credit card debt of affected consumers falls on average by 50% two years into the policy’s implementation. An increase in minimum payment has a stronger effect than does a decrease of a similar magnitude. We build a benchmark life cycle model with soft liquidity constraint to explain the reduction in credit card spending.

Purpose The purpose of this paper is to assess the possibility of asymmetric impact of monetary policy on housing permits issued in each state of the USA. Design/methodology/approach The methodology and approach are based on the linear ARDL and nonlinear ARDL approach to error-correction modeling and asymmetric cointegration. Findings The linear models predict that money supply impact housing permits in 28 states in the short run and only nine states in the long run. However, the asymmetric effects are far more pervasive, highlighting the restrictive nature of the linear model. The results from the nonlinear model show at least one lag of positive and/or negative changes in money supply significantly impacts housing permits in nearly all states. Even in the long run, housing permits in 32 states share a long-run relationship with positive and/or negative changes in money supply. The authors also find contractionary monetary policy has a greater influence on housing permits in most states compared to expansionary policy. Originality/value For the first time, the authors use state-level data and asymmetric approach to assess the impact of monetary policy on house permits issued in each state of the USA.

ABSTRACT There is an intricate link between money supply and house prices. However, housing markets have downward price rigidity, different supply elasticities, and changing market sentiments. Thus, the response of house prices to expansionary monetary policy shocks differs from contractionary shocks. We use an asymmetric/nonlinear autoregressive distributive lag (NARDL) approach to estimate the asymmetric effects of money supply on house prices in each state in the U.S. a practice that makes our study differ from previous research. The house price growth in 38 states responds symmetrically to money supply changes in the short run. However, in 48 states, positive changes in money supply impact house prices differently from negative changes in the short run. In addition, there is a long-run relationship between money supply and house prices, but only when we account for asymmetries.

Purpose The purpose of this paper is to assess and compare the symmetric and asymmetric effects of consumer sentiment on house prices in each state of the USA. This is the first study that uses state-level data. Design/methodology/approach Both linear and nonlinear autoregressive distributed lag approaches are used to assess the asymmetric effects of consumer sentiment on house prices in each state of the USA. Findings When the authors estimated a linear symmetric model, this paper found short-run effects of consumer sentiment on house prices in 34 states that lasted into the long-run in only 13 states. The comparable numbers by estimating a nonlinear asymmetric model were 47 and 22, respectively. The increase in the number of states where consumer sentiment affects house prices was attributed to the nonlinear adjustments of consumer sentiment. Originality/value The authors deviate from previous research and assess the impact of consumer sentiment on house prices by using data from each state of the USA. The authors also deviate from previous research by demonstrating that the effects could be asymmetric. No study has done this at the state-level.

Purpose The purpose of this study is to assess the symmetric and asymmetric impact of a measure of policy uncertainty on house permits issued in each state of the USA. Design/methodology/approach To assess the symmetric effects, the authors use Pesaran et al.’s (2001) linear autoregressive distributed lag (ARDL) approach to error-correction modeling. To assess the asymmetric effects, they rely upon Shin et al.’s (2014) nonlinear ARDL approach to error-correction modeling. Both approaches have the advantage of producing short-run and long-run effects in one step. Findings The authors find short-run symmetric effects of policy uncertainty on house permits issued in 22 states that lasted into the long run in three states only. However, the numbers were much higher when they estimated the possibility of asymmetric effects of policy uncertainty. Indeed, they found short-run asymmetric effects in 38 states and long-run asymmetric effects in 18 states. Originality/value Some previous studies assessed the effects of a measure of policy uncertainty on house prices. In this paper, the authors extend the same analysis to the supply side of the housing market by assessing the effects of policy uncertainty on house permits in each state of the USA.

Using account-level credit card data from a major Turkish bank we show the impact of a unique restrictive credit card policy on consumption and debt repayment behavior. The complex policy imposes two types of soft liquidity constraints for certain credit card holders: progressively higher minimum payments over time and cash advances restrictions. We show that increasing minimum payments initially increase credit card spending and debts, then reduce the spending and debts. The policy reduces average monthly credit card debt of affected consumers by about TL184 two years into policy implementation, implying about 15% higher debt repayment ratio. The initial increase in credit card spending is due to intertemporal arbitrage: consumers move forward credit card spending to avoid future high borrowing costs. Restricting cash advances, among other policy mandates, has the strongest effect in reducing credit card spending and promoting faster debt repayment. Policy announcement also has a marginal effect in instigating change in credit card usage behavior. These results are consistent with the theory of liquidity constraints and consumption (Carroll and Kimball 2005). Our results show that a well-designed credit card policy will likely impose significant liquidity constraints instigating change in consumers’ spending and debt payment behaviour.

Using a large dataset of news releases, we study instances of investors’ mistaken reaction, or misreaction, to news. We define misreaction as stock prices moving in the direction opposite to the news when it is released. We find that news tone predicts returns in the cross-section only upon the occurrence of misreaction. Stocks that are larger, more liquid, more visible, and more covered, by analysts or by the media, are less likely to exhibit misreaction. On the other hand, the ambiguity and complexity of news content, and variables that proxy for investor distraction, are all associated with more misreaction and greater predictability.

We study the impact of credit tightening policy implemented by the Turkish Banking Regulation and Supervision Agency on consumer spending in the period between January 2010 and August 2013. We find that consumers with high amounts of debt were severely affected compared to consumers with low debt. Following the implementation of the policy, relative spending of highly indebted consumers dropped by more than 70%, a significant and persistent drop for many months subsequent to the policy date. The policy effect was strongest for consumers that are young, single and have a low credit card limit.