Stanford Law Class
Yet just just how borrowers answer regulations that are such mostly unknown. Drawing on both administrative and study information, we exploit variation in payday-lending legislation to analyze the end result of cash advance limitations on consumer borrowing. We discover that although such policies work well at reducing payday financing, customers respond by moving with other types of high-interest credit (as an example, pawnshop loans) as opposed to old-fashioned credit instruments (as an example, charge cards). Such moving exists, but less pronounced, for the payday that is lowest-income users. Our outcomes declare that policies that target payday financing in isolation might be inadequate at reducing customers’ reliance on high-interest credit.