Document Type
Article
Publication Title
American Law and Economics Review
Publication Date
Fall 2014
ISSN
1465-7252
Page Number
550
Keywords
payday borrowing, credit, interest, consumer behavior
Disciplines
Banking and Finance Law | Consumer Protection Law | Law
Abstract
I examine whether receipt of a $300 tax rebate by payday borrowers affects their like- lihood of borrowing, loan size, or default behavior. Results from fixed-effects models show that the rebate decreases the probability of taking out a payday loan in the short run. These impacts are most apparent among credit-constrained, infrequent borrow- ers. Those who take out loans around the time of the rebate borrow amounts typical of their normal borrowing behavior but are more likely to default. Overall, however, the rebate's effects are small and short-lived, suggesting a muted response to this cash windfall in payday borrowing and repayment.
Recommended Citation
Paige Marta Skiba,
Tax Rebates and the Cycle of Payday Borrowing, 16 American Law and Economics Review. 550
(2014)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1458