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Volume 11 Issue 1
March 2008
Using the Probabilistic Model Checker PRISM to Analyze Credit Card Use
Amani El Rayes1 and Mevliyar Er2
1Economic Forecasting and Planning Techniques Center, Institute of National Planning. Cairo, Egypt
2College of Food, Tourism and Creative Studies, Birmingham, UK
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In recent years, credit cards became the main source of purchasing used by consumers instead of cash payment. Credit card companies pay for the purchase, but the card user has to repay the money borrowed to the card issuing company at a later time. In addition to the amount of the purchase, the card user also has to pay interest on the loan. Interest on a loan is calculated as a fixed fraction of the loan amount and is charged for the time period of the loan. In this paper we use the Probabilistic Model Checking Tool PRISM to study the effect of using credit cards on people\'s lives. This approach allows us to obtain performance measures on various policies such as changes in the interest rate and its effect on the credit card loan entitlement of the card user, the effect of different repayment policies on the user’s spending ability in the short and long run, the effect of different interest rates and different spending preferences on the loan in the short run, and the effect of different spending preferences and different repayment policies on the remaining balance in the long run.
From the study we investigate the level of loans and the amount of installments after which the card holder goes through a cycle of interest repayment only. That is, he/she can not use the card to withdraw money any more but has to make interest payments on the debt.
Keywords:
credit card system, performability, probabilistic model checking, simulation
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