Competitive Effects of Basel II on U.S. Bank Credit Card Lending
William W. Lang
Federal Reserve Bank of Philadelphia
Loretta J. Mester
Federal Reserve Bank of Philadelphia and
The Wharton School, University of Pennsylvania
Todd A. Vermilyea
Federal Reserve Bank of Philadelphia
March 2007
Forthcoming in Journal of Financial Intermediation.
This manuscript includes the paper and the supplementary materials. These supersede Federal Reserve
Bank of Philadelphia Working Paper No. 05-29, “Potential Competitive Effects on U.S. Bank Credit Card
Lending from the Proposed Bifurcated Application of Basel II,” December 2005.
Correspondence to Lang at Supervision, Regulation, and Credit Department, Federal Reserve Bank of
Philadelphia, Ten Independence Mall, Philadelphia, PA 19106-1574; phone: (215) 574-7225; e-mail:
William.Lang@phil.frb.org. To Mester at Research Department, Federal Reserve Bank of Philadelphia,
Ten Independence Mall, Philadelphia, PA 19106-1574; phone: (215) 574-3807; e-mail:
Loretta.Mester@phil.frb.org. To Vermilyea at Supervision, Regulation, and Credit Department, Federal
Reserve Bank of Philadelphia, Ten Independence Mall, Philadelphia, PA 19106-1574; phone: (215) 574-
4125; e-mail: Todd.Vermilyea@phil.frb.org.
We thank Jim DiSalvo and Vidya Nayak for research assistance and Sally Burke for editorial assistance.
The views expressed in this paper do not necessarily represent those of the Federal Reserve Bank of
Philadelphia or the Federal Reserve System.
This paper is available free of charge at www.philadelphiafed.org/econ/wps/index.html.
Competitive Effects of Basel II on U.S. Bank Credit Card Lending
William W. Lang
Federal Reserve Bank of Philadelphia
Loretta J. Mester
Federal Reserve Bank of Philadelphia and
The Wharton School, University of Pennsylvania
Todd A. Vermilyea
Federal Reserve Bank of Philadelphia
Abstract
We analyze the potential competitive effects of the proposed