The Association Between Payday Lending and Economic Well Being, Evidence from State Level Panel Data from 1991-2013
Johnston, Alistair Miles
Payday lending, short-term loans for small amounts of money with high interest and fees,is a controversial practice. Many have argued that it creates cycles of debt that harmborrowers long-term economic well being. The research to this point has measureddifferent outcomes of economic well being with mixed results. In this paper I use paneldata from 1991 through 2013 for all states and Washington DC to measure theassociation between laws allowing payday lending and two measures of economic wellbeing: income and the poverty rate. Although my results are largely mixed, contrary tothe prevailing popular notion, I find some evidence that payday lending may beassociated with benefits to economic well being.
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