Factors affecting in choosing credit

cards in perspective of Eastern Bank

Limited
Introduction and Problem statement:
The consumer habit of the growing middle class is a boon for the credit card business of
different domestic and foreign banks in Bangladesh. Despite recent financial crisis, there
are still huge potential for future growth and further penetration of wide variety of local
and international cards exists in Bangladesh. This research proposal presents a plan to
explore and investigate various attributes that customers consider of importance while
selecting a credit card in an emerging market like Bangladesh.

The Purpose of the Study:

In Bangladesh a total of 17 Banks issue credit cards, which include both local and foreign
banks. Credit cards have become more and more important as a source of income for the
banks and there has been a high growth in number of credit cards circulation. The three
common credit cards issued by banks are namely Classic, Gold and Platinum. These cards
are issued based on
individual income level and other criteria set by the credit card issuer. Credit limit is
usually set based on the assessment of the information provided in application forms.
Standard Chartered Bank, formerly known as ANZ Grindlays Bank, is a pioneer in the
Bangladesh credit card industry. The bank started offering cards in the mid 1990s. In
1997, the bank launched full-scale credit card operations
Top players in the country's plastic money business are adding up to 4,000 new users a
month, industry insiders said. The number of the cardholders could potentially double in
the next five years, they added.

A top bank that issues credit cards now estimates there are nearly 8 lakh credit cards in
the country. A growing number of visitors at shopping malls and restaurants and a rise in
overseas travel are driving the growing trend.
Although the foreign banks started and are still leading in the credit card business in
Bangladesh, their main drawback is that they do not operate countrywide and focus only
the upper niche. In this area, local Banks like Eastern Bank Limited can play an
important role as they have braches in all over the country.
The research proposal presented here focuses on exploring the prime factors those mostly
affect the vast middle class consumers of all over the Bangladesh to choice a credit card.
As a result, this research will provide valuable insight to the strategic decision makers of
local Banks regarding potential credit card customer preferences.

An interesting observation of EBL is that most of the credit card holders of this bank are
not internal customers that mean they dont obtain any account or banking relationship
with the bank except for credit card. The target population of our study will be those who
have bank accounts in EBL but dont use its credit card. Therefore our research will also
address a new opportunity for EBL to make suitable offer of credit card to those account
holders who dont have EBL credit cards.

Literature Review:
Since the time of its inception in the 1950s, a large number of researches have been
undertaken to find out the most important credit card selection factors. Some of them
focused on specific countries and markets while others focused on demographic factors
such as age, gender, marital status, education and employment status etc.
Lydia and Ramin (2006) examined credit card selection criteria among Singaporeans and
found that convenience of use, protections and economics were the main drivers, while
the reputation of card and travel economics was less important factors. Chan (1997) in

Hong Kong found that economic factors like long interest-free repayment period and
low annual fee, to be the most important deciding factors for the use of credit cards and
prestige factor (the use of credit card as status symbol) is the least important factor.
Meidan and Davos (1994) studied credit card selection factors in Greece and found that
local acceptance, international acceptance, and security were the major drivers, while the
status symbol of the card was least important. Barker and Sekerkaya (1992) in
Turkey found that the most important factors for using a credit card was
the ease of payment and diminished risk of carrying cash. Kaynak et al.
(1995), also in Turkey showed that the
Availability of emergency funds through credit cards, convenience
during travel, and shopping without paying cash immediately were the
most important factors for the use of credit cards. Kaynak and Harcar
(2001) in Turkey cited social acceptability and easy access to cash as key
factors for the use of credit cards. Alhassan and Yakubu (2007) analyzed credit

card ownership and usage behavior in Saudi Arabia and found that international
acceptability and usage convenience are the most positively evaluated credit card
attributes. Butt, Rehman and Saif (2010) studied credit card selection criteria in
perapective of Pakistan and found that convenience, economical use, both local and
abroad, and sense of security are important attributes that customers consider while
selecting a credit card. Interestingly they found that prestige symbol of the credit cards
still has a noticeable importance.
Concerning Demographic, Boyd and White (1994) showed that on the importance related
to gender, the males appear to be more interested in having their needs met quickly and
conveniently, while females are apparently more interested in longer-term aspects relating
to organizing their finances and becoming more financially secure. They also indicated
older households with adult children search more for convenience while younger
households search more for low interest rate while choosing credit cards. Lydia and
Ramin (2006) showed that the high income earning and the better-educated Singaporeans
place less value on the economic-promotional factors when it comes to credit card
selection. Singaporeans who are older, married and professional are inclined to weight

the convenience-protection factor more than the economic-promotional factor. They also
showed that from a gender perspective, female Singaporeans seem to value the
promotional factor more, while their male counterparts showed a preference for the
economic factor. Another study, Kara et al.(1994) found that there is a significant
difference in selection of credit card between males and females and that deferred
payment type is considered more important for males than for females. Mohammed
(2001) argued that new generation of customers tend to put more emphasis on the
convenience factors than economic factors.
Conceptual framework:
In our study the following factors are independent variables which directly have effect on
choosing credit cards:
Convenience:
a1. Acceptance in local market
a2. Credit limit
a3. Fund transfer facility
a4. Acceptance outside Bangladesh
a5. Transparency of bank charges
a6. Bill payment
Protection:
b1. Insurance Coverage
b2. Protection when the card is lost or stolen
Flexibility:
c1. Access to bank statement and ability to pay electronically.
c2. Ability to ask for a temporary credit limit increase.
c3. Availability of supplementary cards.
Economies:
d1. Annual Fee on the basis of card type
d2. Level of cash advance
d3. Installment facility
d4. Interest rate

Promotion
e1. Discount and Special treat on hot spots.
e2. Loyalty and reward program
e3. Gift promotion
Reputation:
f1. Symbol of status.
f2. Brand image
Demographic factors are moderating variables as they influence the relationship of above
stated independent variable on credit card selection.

Figure: Conceptual Framework for our study

Research Design:
We will use descriptive research for our purpose to identify and obtain information on the
important credit card selection factors. Our research will be co-relational type. We
analyzed secondary data have come up with a hypothesis stated above. We will perform
Questionnaire survey for our study which will bring out appropriate conclusions.
Sampling:
The target population of our study will be those who have bank accounts in EBL but
dont use its credit card. EBL management has to provide required account information
which will be our sampling frame. We will use simple random sampling using computer
generated random numbers. Sample size will be determined after we get the required
information from EBL management.
Measurement Instrument:
We will use structured questionnaire for our purpose. For selection factors customers
have to answer each question on a scale of 1 to 5 (Likert Scale). Each question will ask
for customer agreeableness to the importance of single construct (a1, a2, a3 etc.) of each
independent variable
For demographic factors structured questionnaire will be used.
Data Collection:
Survey via personal interview will be the best choice as it will ensure that respondents
will understand our need and will provide feedback accordingly. So we will strongly
recommend this data collection technique. But the main problem is that it will be very
costly.
Data Analysis:
As we are using probabilistic sampling our data analysis will be of statistical type. At first
statistical analysis will be performed to check the validity of the questionnaire.
Research Plan and Timeline:
Initial plan & timeline of research:
1. Gathering required account information from EBL management. (1 week)
2. Determining sample size and sample population (2 Days)
3. Survey via personal interview using structured questionnaire (1 month)

4. Data Analysis using statistical method. (2 week)

5. Final report writing and presentation (1 week)
Cost:
Following costs will be incurred in our research:
1. Survey via personal interview cost including transportation
2. Researcher cost including cost of the research assistant
3. Stationeries and others
4. Statistical software license and other IT facilities cost.
Limitations:
Our research proposal has following limitations:
1. Our sampling frame is the accounts information from EBL management. EBL
management may not provide the complete input as it is confidential
2. Survey via personal interview is a costly procedure.
3. Our research only focuses the account holders of EBL. The persons who dont
have bank account of EBL are out of scope.
4. Customers may not be available at home at the interview time.
5. Customers may have lack of knowledge of credit card and its usage and benefits.

Bibliography:
Lydia LG, Ramin CM. (2006). Credit Card Selection Criteria: Singapore Perspective.
Economic Growth centre Working Paper Series 0610, Nanyang Technolgical University,
School of Humanities and Social Sciences, Economic Growth centre.
Chan, R.Y. (1997). Demographic and Attitudinal Differences between Active and
Inactive Credit Card Holders - the Case of Hong Kong International Journal of Bank
Marketing, Vol. 15, No. 4, pp. 117-125.
Meidan, A. and D. Davos (1994). Credit and Charge Cards Selection Criteria in
Greece, The International Journal of Bank Marketing, Vol. 12, No. 2, pp. 36-44.
Barker, T and A. Sekerkaya (1992). Globalisation of Credit Card Usage: The Case of a
Developing Economy, International Journal of Bank Marketing, Vol. 10, No. 6, pp. 2731.
Kaynak, E. and T. Harcar (2001). Consumers Attitudes and Intentions Towards Credit
Card Usage in an Advanced Developing Country, Journal of Financial Services
Marketing, Vol. 6, No. 1, pp.24-39.
Kaynak, E., O. Kucukemiroglu, A. Ozmen (1995). Correlates of Credit Card Acceptance
and Usage in an Advanced Developing Middle Eastern Country, Journal of Services
Marketing, Vol. 9, issue 40, pp. 52-63.
Alhassan GAM, Yakubu AU (2007). Credit card ownership and usage behavior in Saudi
Arabia: The impact of demographics and attitudes towards debt. J. Financial Services
Market., 12(3), 219-234.

Babar ZB, Kashif UR, Iqbal S, Nadeem S (2010) Customers credit card selection criteria
in perspective of an emerging market. African Journal of Business Management Vol.4
(13), pp. 2934-2940, 18 October 2010
Boyd WL, White C (1994). Customer Preferences for Financial Services: An Analysis.
Int. J. Bank Market. 12(1), 9-15.
Kara A, Kaynak E, Kucukemiroglu O (1994). Credit card development strategies for the
youth market. The use of conjoint analysis. Int, J. Bank Mark., 12(6): 30-36.
Mohammed A (2001). Bank selection criteria employed by college students in Bahrain:
an empirical analysis. Int. J. Bank Market. 19(3), 115-125.