Evaluating the Long-Term Credit-Risk Effects of Cross-Selling Promotions Using Longitudinal Causal Modeling

Abstract

This research assesses the long-term credit-risk implications of cross-selling promotions that encourage customers to open additional credit products. A dataset of 1.1 million accounts observed over 36 months was analyzed using a longitudinal causal model incorporating marginal structural models and time-dependent confounder adjustments. Results indicate that customers targeted by cross-selling promotions show a 14.6% higher cumulative probability of 180-day default over three years. Sequential mediation analysis finds that 63.4% of this effect is driven by increases in total credit exposure following promotion uptake. The study provides a comprehensive quantification of the delayed risk consequences of promotional strategies.