Document Type
Article
Publication Title
Journal of Money, Credit, and Banking
Publication Date
3-2015
ISSN
0022-2879
Page Number
223
Keywords
consumer credit, payday lender, credit bureau
Disciplines
Consumer Protection Law | Law
Abstract
High-cost consumer credit has proliferated in the past two decades, raising regulatory scrutiny. We match administrative data from a payday lender with nationally representative credit bureau files to examine the choices of payday loan applicants and assess whether payday loans help or harm borrowers. We find consumers apply for payday loans when they have limited access to mainstream credit. In addition, the weakness of payday applicants’ credit histories is severe and longstanding. Based on regression discontinuity estimates, we show that the effects of payday borrowing on credit scores and other measures of financial well-being are close to zero. We test the robustness of these null effects to many factors, including features of the local market structure.
Recommended Citation
Paige Marta Skiba, Neil Bhutta, and Jeremy Tobacman,
Payday Loan Choices and Consequences, 47 Journal of Money, Credit, and Banking. 223
(2015)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1457