Financial Market and Institution

A credit card is the new era money which is also called as plastic money. The credit card can be used to obtain instant cash like a debit card but in case of credit card banks lend money to the customer and change high rate of interest when the amount is not paid fully to the banks. The banks approve a certain cash limit which can be withdrawn from the credit card and also give a spending limit. This limit is called a credit limit.

People often misuse the credit limit and do not track the spending which creates a huge trouble for the individuals.

Technology has played a key role in the payment industry and evolution of cashless payment and at the same time it has also given opportunities to the miscreants or Hackers to misuse the Debit or credit card information’s to take advantages and steal money from victim’s account. This is a major concern for the banks and credit card issuers.

The topic is very imported to understand the advantages and disadvantages of credit card and impact of interest rate on the credit card payment. The Credit card misuse is most common among the Youth and college going student. They use it to spend on anything and do not use security measures to prevent any misuse of a credit card by other people. This is a major concern among banks and individuals parents. They have to bear the interest payment burden.

The credit card debt is becoming a serious concern for the individuals as interest rate rise, they miss the payment and their credit scores become less trustworthy for the banks.

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The credit plays important role in the economic activities and money formation. People use borrowed money to meet their needs which could be buying homes, card, going for vacation etc.

Credit card companies mostly target young people as they are eager to live their life in their own ways and want to meet their needs. Credit card companies target them for their offer and young students and individuals go for it without realizing about the interest rate default consequences. They sometime overspent it which makes their life troublesome and difficult to meet the interest payment.

The most important factor which could avoid the misuse of the Credit cards is the education about the advantages and consequences of having a credit card and impact of the interest rate on re-payment of credit dues. For parents, it is very important to educate their children about spending habits and bad impact of Credit Misuse.

The objective of the study:

The Objective of the research about the topic is to highlight the importance of awareness about the credit card misuse, relationship between the credit card dues and interest rate. The topic is about the Misuse of credit card misuse and analysis of Correlation between the Stock, Interest rate and inflation using the data collected from the secondary sources. Below are the few objectives of the project,

  • Descriptive statistics
  • Correlation analysis
  • Focusing on the Credit card Misuse and Impact of Interest rate


Purpose and Scope of study:

The purpose of the study would to understand the different aspect of the data analysis and understanding the how a credit card works, how to prevent credit card misuse. Credit cards frauds are becoming a new trend and many individuals are losing money though different types of fraud done by the criminals. The study will be done on different factors which are affecting the credit card and its misuse.

The Project will be focused on the credit card misuse by the young generation and other hackers, this project will explain the relationship between the interest rate, inflation,and stock using the quantitative method.

Literature reviews

In any country, the security of card information relies upon the bank’s traditions, systems, and general security levels. While looking into distortion in Asia, They have seen that various banks have woefully poor wellbeing endeavors in perspective of the nonappearance of benefits or cognizance of the risks. Logically, the onus is on the card supporter rather than the card customer to envision blackmail.

One of the banks’ standard contraptions is blackmail disclosure programming that looks for amazing models and peculiarities. Another is ground-breaking wellbeing endeavors over the control of the card per clients. In any case, the setting aside some cash part outside of the United States and Europe just every now and then uses these ID strategies. (Linnitt, 2004)

Stephen F. Pirog and James A. Roberts have analyzed the Visa abuse among the undergrads. They found that Visa abuse has a negative effect or worries for the advertisers. They have examined the identity which assumes a key job in the abuse of credit card among the undergrads. They have connected the 3M various leveled model of identity on the served information from 254 understudies. They discovered four distinctive identity qualities which were the explanation for the abuse of the charge card (SF Pirog, 2007).

The examination was finished by jeff joireman, Jeremy kees and David sprott break down whether transient presentation coordinates the impact of ongoing obtaining tendencies (CBT) on Credit card commitment. Candidates completed the worry of future results scale, a routine buying scale, and uncovered their charge card commitment.

Results revealed that CBT mediated the association between stress with incite results and Visa commitment, and high stress with fast results enhanced the impact of CBT on charge card commitment. This suggests constant buyers who fixate on enhancing brief results are at much higher peril of working up an enormous measure of Credit card commitment (Jeff joireman, 2010).

Jill M. Norvilitis (2014) have considered the adjustments in the scratch and ownership of charge cards by the understudies. They additionally contemplated the understudy’s frame of mind and conduct towards the abuse of Credit Card .He found that over the timeframe quantities of charge cards and obligation has been diminished because of the presentation of Credit card act in the USA. The Attitude turns out to be increasingly negative while money related prosperity was an expansion (NORVILITIS, 2014).

HyeJung (2015) Park has inspected the diverse design introduction in influencing the impulsive purchasing and abuse of charge card. He found that distinctive mold intrigue has fundamentally expanded spending and furthermore in a roundabout way influencing the abuse of the charge card (Park, 2015).

Bluff A. Robb has completed an examination to discover the connection between money related data and Credit Card lead of students. The extensive openness of Credit Card has raised stresses over how students may use those cards given the negative outcomes identified with credit abuse and botch. He has utilized a case of 1,354 understudies from a critical southeastern school, results prescribe that cash related data is a colossal factor in the charge card selections of students (Robb, 2011).

A Credit Card has the brand name and logo of an association that controls and coordinates the cards. A bank, which is required to meet the measures set by the charge card association, truly issues the card. The Visa association raises resources from charges to the bank. These charges consolidate fines for bad conduct. Exactly when a customer procures an adversity as a result of blackmail, the Credit card association supports it, in any case, it recuperates the money from the issuing bank.

This relationship is basic in light of the way that regardless of the way that the customer takes comfort from seeing the charge card association picture on their card, the obligation of “disapproving” for them truly happens to the issuing bank. Moreover, when a customer makes a purchase at a retailer, the issuing bank probably won’t have a Visa terminal in the retail outlet. Clearly, banks share workplaces accordingly any card per client will have the ability to process the trade. In any case, this suggests the trade is depended to the methods of one more bank (Linnitt, 2004).

Data and methodology

The data has been collected through the using the second data collection method. The Secondary data is collected from the various research papers on the Credit card misuse topic, research articles, websites. The research is based on the secondary data and theories which is already done by the other research on the same topic.

The main tool for collecting data which is used in the research is quantitative. These types of data collection benefit the researcher because of its low cost and ease of access. Secondary data collected in this research will support the primary data to reach the research goal with accurate results in a professional manner.

The secondary data were collected over the journals, articles, websites, and books which discussing the same issue in this research but sometimes its deviant according to special circumstances.

Research Methodology:

This is the most appropriate analysis method to analyze non-numerical data. Whereas, the quantitative data collected from the survey answers have a transformable type from textual shape to be summarized, presented and analyzed in charts and graphs using statistical tools. Thus, the results will be understandable, comparable and more useful to the users.

Secondary data:

Secondary data has been collected from the two stock exchanges about the several stocks, inflation and interest rate. The quantitative method has been used in the report and for the analysis purpose, we have used the statistical methods such as regression and correlation has been used.

Result and Analysis


We have performed the regression analysis form the above data set where in Dubai index was chosen as the dependent variable and the other two were the independent variable i.e. interest rate and Inflation rate.

Below is the output of the regression analysis of the selected data set.

UAE stock and Interest rate, Inflation:


  • Regression Statistics
  • Multiple R 0.119191
  • R Square 0.014207
  • Adjusted R Square 0.013855
  • Standard Error 0.013125
  • Observations 2803


As per the above calculation, we see that R-square is very and it is 14% which means that the variability of the Y which is the dependent variable is cannot be explained by the entire set of data independent variables which is Interest rate and inflation.

This shows there is no relationship between the Stock index and the other two variable i.e. interest rate and inflation. These two variables impact the stock index to a very large extent.


  • df SS MS F Significance F
  • Regression 1 0.006954 0.006954 40.36602 0.0000
  • Residual 2801 0.482523 0.000172
  • Total 2802 0.489477


The significance level is less than 0.05 from the above ANOVA calculation. This is used to decide whether there is any liner relationship between the selected variables. The p-value suggests that all two variables have a liner relationship between the three variables.

For example, the Null hypothesis would be Interest and inflation rate has to impact on the Stock index whereas Alternate would be these tow variable does not affect the Stock index. So looking at the p-Value, we would accept the null Hypothesis as value is less than the 0.05 which mean Interest rate and Inflation has an impact on the stock index.

USA stock and Interest rate, Inflation:


  • Regression Statistics
  • Multiple R 0.012255841
  • R Square 0.000150206
  • Adjusted R Square -0.000233467
  • Standard Error 1.183760183
  • Observations 2608


The R-square is very low which means that the dependent variable cannot be explained by the selected data set of independent variables.


  • df SS MS F Significance F
  • Regression 1 0.54859691 0.54859691 0.39149471 0.53156955
  • Residual 2606 3651.75697 1.40128817
  • Total 2607 3652.30557


The significance level is more than 0.05 from the above ANOVA calculation. This is used to decide whether there is any liner relationship between the selected variables. The p-value suggests that all two variables have no liner relationship between the three variables.


Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

Intercept 1.694068187 0.02318017 73.082645 0 1.64861478 1.7395216 1.64861478 1.7395216

0 -0.833293657 1.33178808 -0.62569538 0.53156955 -3.44476323 1.77817592 -3.44476323 1.77817592

When we look at the individual variable to test the T-test again these variables fails the test as p-value is more than the 0.05 of significance level. This shows there is not a significant relationship among these variables but to a certainextent, they do have.

Descriptive statics

US Stock:


Mean 0.000182368 Mean 0.000182368

Standard Error 0.000302645 Standard Error 0.000302645

Median 2.48505E-06 Median 2.48505E-06

Mode 0 Mode 0

Standard Deviation 0.01679613  Standard Deviation 0.01679613

Sample Variance 0.00028211  Sample Variance 0.00028211

Kurtosis 13.75358408 Kurtosis 13.75358408

Skewness -0.019438278 Skewness -0.019438278

Range 0.342070904 Range 0.342070904

Minimum -0.152888115 Minimum -0.152888115

Maximum 0.189182788 Maximum 0.189182788

Sum 0.561694542 Sum 0.561694542

Count 3080 Count 3080

US-DS Basic Mats – PRICE INDEX US-DS Industrials – PRICE INDEX

Mean 0.000318685 Mean 0.000342479

Standard Error 0.000318208 Standard Error 0.000239312

Median 0.000240711 Median 0.000478544

Mode 0 Mode 0

Standard Deviation 0.017659817 Standard Deviation 0.01328125

Sample Variance 0.000311869 Sample Variance 0.000176392

Kurtosis 9.023007892 Kurtosis 6.796762679

Skewness -0.302795242 Skewness -0.320208173

Range 0.290579807 Range 0.188895257

Minimum -0.134619694 Minimum -0.091586522

Maximum 0.155960113 Maximum 0.097308735

Sum 0.981548448 Sum 1.054835658

Count 3080 Count 3080

US-DS Consumer Gds – PRICE INDEX US-DS Health Care – PRICE INDEX

Mean 0.000256482 Mean 0.000408919

Standard Error 0.000171595 Standard Error 0.000189715

Median 0.000313917 Median 0.000509132

Mode 0 Mode 0

Standard Deviation 0.009523134 Standard Deviation 0.010528742

Sample Variance 9.06901E-05 Sample Variance 0.000110854

Kurtosis 10.5651513 Kurtosis 10.27358778

Skewness -0.044698332 Skewness -0.030620049

Range 0.166407817 Range 0.189396614

Minimum -0.072048508 Minimum -0.068240681

Maximum 0.094359309 Maximum 0.121155932

Sum 0.789964231 Sum 1.259470575

Count 3080 Count 3080

Above are the descriptive stats about the selected stocks from both countries i.e. UAE and USA. We see than each stock has a different standard deviation which represents the risk in the stock. Each descriptive analysis shows the mean, standard deviation, ranges of the data, skewness of the sample, Median and mode of the data set.

Correlation analysis

UAE stock, Inflation and Interest rate


interest 1

inflation 0.598081 1

DUBAI FIN MKT BANK -0.11909 -0.10146 1

DUBAI FIN MKT CONSUMER STAPLES -0.00478 -0.03513 0.189364 1

DUBAI FIN MKT FINANCIAL INVEST -0.07029 -0.05526 0.677199 0.190411 1

Above table shows the correlation between the three variable which is a stock index, inflation rate, and interest rate. We see that the correlation between the two stock with Inflation and interest rate is low which only 0.04% to 7% has. When we looked at the other stock we see that there are a positive correlation among them and low correlation with inflation and interest rate.

USA Stock, Inflation and Interest rate:

interest rate Inflation US-DS Oil & Gas – PRICE INDEX US-DS Basic Mats – PRICE INDEX US-DS Industrials – PRICE INDEX

interest rate 1

Inflation 0.321765314 1

US-DS Oil & Gas – PRICE INDEX -0.008378787 -0.01225199 1

US-DS Basic Mats – PRICE INDEX -0.019380726 -0.04140712 0.86260343 1

US-DS Industrials – PRICE INDEX -0.021895353 -0.03383792 0.7880433 0.87112587 1

From the above analysis, we see that there is a negative correlation between the Interest rate and US Index and 33 -41% of the correlation between the Inflation rate and stock index. Correlation between the interest rate and inflation is very low which only 32%.

Comments and discussion

We have carried out the regression analysis which shows that there is a significant relationship between the stock index, interest rate, and inflation. We have performed the regression analysis form the above data set where in Dubai Utility index was chosen as the dependent variable and the other two were the independent variable i.e. interest rate and Inflation rate. We have to use the various stocks from the UAE and USA to do the regression analysis which shows that there is less relationship between the stock and the other two variables.

According to the above computation, we see that R-square is low and it is 14% which implies that the changeability of the Y which is the needy variable is not clarified by the whole arrangement of information and factors which are Interest rate and swelling. This shows there is a connection between the Stock file and the other two variable i.e. financing cost and expansion. These two factors affect the stock record to a vast degree.

The credit card misuse is becoming a concern among the individuals and there are various reasons which increase the misuse of credit cards. The interest rate has a huge impact on the credit card spending as interest rate increases then the individual has to pay more interest on the spending and if the interest rate is low then there would be low changes on the amount spend through the credit cards. The interest rate is very much important for the credit card holders as if any changes in the interest rate would impact the credit card payment.


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Financial Market and Institution. (2019, Dec 12). Retrieved from

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