“The aftereffect of State Bans of Payday Lending on Consumer Credit Delinquencies.” Desai, Chintal A.; Elliehausen, Gregory.

Consequently, limiting usage of pay day loans will be likely to reduce delinquencies on main-stream credit services and products.

Abstract: “We test this implication associated with theory by analyzing delinquencies on revolving, retail, and installment credit in Georgia, new york, and Oregon. These states paid down option of pay day loans by either banning them outright or capping the charges charged by payday loan providers at a decreased level. We find tiny, mostly positive, but usually insignificant alterations in delinquencies following the cash advance bans. In Georgia, nevertheless, we find blended evidence: a rise in revolving credit delinquencies but a decline in installment credit delinquencies. Continue reading “The debt trap theory implicates loans that are payday a factor exacerbating customers’ monetary distress.”