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NSF Grant Proposal |
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University of California, San Diego
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Rational Calculation and Trust: A Comparative Institutional Analysis of Emerging Credit Card Markets in Socialist and Post-Socialist and Developing Societies 1. Objective of the Proposed ProjectThe goal of this project is to explore the role of trust and calculation in lending in emerging credit card (CC) markets. We want to investigate the conditions for rational calculation (the use of statistical credit scoring), the ways to substitute trust for rational calculation, their joint use, and the consequences of using the two.
We will compare the way banks (1) issue CCs in six post-socialist East European and two Asian socialist countries. The countries represent three distinct contexts: relatively successful and moderately prosperous ones with both political and economic institutions transformed (the Czech Republic, Hungary, and Poland), less successful ones where the dual transformation has been attempted (Bulgaria, Russia, and Ukraine), and successful but much poorer ones, where political institutions remained stable and kept a key role while economic institutions were remade (China and Vietnam). We will contrast them with banks in three developing countries without a communist past (Portugal, Mexico and Thailand).
The questions our project seeks to answer are as follows: Under what conditions can uncertainty be converted to risk and trust be replaced by probability calculus? If these conditions are not present, and lenders still must rely on trust, how can new trust be created and old trust be stretched and extended so that certain volume of transactions can still be generated? What are the consequences of conducting business on the basis of trust rather than on rational calculation?
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