On-Us transactions in credit card market in Turkey and rational banks

Abstract

From the early 21 st century, network externalities and two-sided markets have been one of the important parts of economy literature. In theory of economics, payment systems and credit card markets were considered to be one of the classical examples of two-sided markets. The credit card markets of the USA and western countries have been analyzed by various economists through the models established. However, economists have not been much attracted to the analysis of the dynamics of the market by modeling the Turkish credit card market with a structure different from its western counterparts. Because the banks in Turkish credit card market carry out both the functions of issuer and acquirer, such transactions as On-Us are intensely realized. Therefore, the profit functions of Turkish banks in credit card markets were different from the models analyzing the credit card markets of the USA and western countries. In the study, the attempts of the banks in Turkish credit card market to maximize their profits and their results have been dealt with, and the factors affecting the profits of the banks have been analyzed. © EuroJournals Publishing, Inc. 2012.