Modelling the purchase propensity: analysis of a revolving store card

Abstract

We investigate the incremental roles of information that becomes available only after a revolving loan has been granted in explaining and predicting the time taken until the borrower makes a second purchase. Using data relating to a store card, granted around the time of first purchase and used in Belgium, we find that characteristics of a first purchase and remaining credit available for use enhance the explanatory and predictive power of application characteristics. The relationship differs between good and poor payers.

Keywords:

• credit scoring
• survival analysis
• risk
• banking

Acknowledgements

GA is grateful to the University of Edinburgh and Credit Research Centre for financial support during this work, and to ESRC for dissemination funding (PTA-026-27-0216). We are grateful to the referees for their useful and constructive comments on the paper.