Jeanne M. Hogarth

The adoption of electronic banking technologies by US consumers

Is there an electronic banking (e‐banking) revolution in the USA? Millions of Americans are currently using a variety of e‐banking technologies and millions more are expected to come “online.” However, millions of others have not or will not. This paper explores factors that affect the of adoption or intention to adopt three e‐banking technologies and changes in these factors over time. Using a Federal Reserve Board commissioned data set, the paper finds that relative advantage, complexity/simplicity, compatibility, observability, risk tolerance, and product involvement are associated with adoption. Income, assets, education, gender and marital status, and age also affect adoption. Adoption changed over time, but the impacts of other factors on adoption have not changed. Implications for both the banking industry and public policy are discussed.

If You Build It, Will They Come? A Simulation of Financial Product Holdings Among Low-to-Moderate Income Households

The 1995 Survey of Consumer Finances was used to determine holdings of selected financial products by low-to-moderate income households, defined as households with incomes less than or equal to 80% of median household income for their region. First, we estimated determinants of holding bank accounts. Next, we estimated determinants of holding other selected products, contingent on holding a transaction account. Finally, we estimated the potential demand for these other products by households without accounts, should they become account holders. We found that if non-account holding households were to obtain accounts, they would increase their demand for credit cards, first mortgages, car loans, consumer loans, certificates of deposit, and IRA/Keogh accounts. The implications for financial institutions, policy makers, and consumer educators are presented.

Consumer information search for home mortgages: who, what, how much, and what else?

A prerequisite for consumers to make good decisions is to have all the relevant information about the decision at hand, and therefore mandatory information disclosure is often adopted as a public policy remedy to assist consumer decision making (Durkin & Elliehausen, 1990; OCED, 1992). In the consumer mortgage loan market, the Truth in Lending Act (P.L. 90–321; 15 USC §1601) and the Real Estate Settlement Procedures Act (P.L. 93–533; 12 USC §2601) require such mandatory disclosure of information (Federal Reserve Board, 1997; Retsinas, 1997). Unlike the well-acknowledged role of information per se, our understanding of consumer information search behavior when shopping for credit, such as a mortgage loan, is very limited (Lee & Hogarth, 1999a). Addressing this issue, the purpose of this study is to investigate how consumers search for information, particularly when looking for a home mortgage loan. The insights gained from this analysis will guide us to more effective ways to help consumers choose a mortgage loan, and, as a result, improve market efficiency and effectiveness. The remainder of the paper is structured as follows. First, we present background information related to mortgage markets, followed by a review of previous studies on

Why Households Don’t Have Checking Accounts

Using the Surveys of Consumer Finances from 1992 to 1998, this article explores the reasons for not having a checking account, including product design, human capital, motivation for having a checking account, and institutional factors. Focusing primarily on reasons related to product design, we found that smaller family units, unemployed people, those with shorter planning horizons, older people, families with higher levels of education, those who have some other bank account, and those with better credit histories were more likely to give reasons related to product design than were their counterparts. Reasons for not having an account have changed over time, shifting away from product design factors toward other reasons. We suggest potential responses for firms, community educators, and policy makers.

Consumers’ resolution of credit card problems and exit behaviors

Using data from the Survey of Consumers, this study focuses on consumer’s resolution efforts with credit card problems and the likelihood of “exiting” – that is, discontinuing the use of a given credit card or of the financial institution associated with the card. Among all households with a problem, nearly two‐thirds (63 percent) were able to resolve their problem, while over half (55 percent) exited. Exit was associated with marital status, race, how dissatisfied the consumer was, number of problems related to credit cards, and attribution. Holding all else constant, consumers who were likely to resolve their problem were only half as likely to exit. Thus, credit card companies need to carefully and quickly address their customers’ problems and resolve their complaints.