The result of State Bans of Payday Lending on customer Credit Delinquencies
The result of State Bans of Payday Lending on customer Credit DelinquenciesAbstract: “The financial obligation trap theory implicates loans that are payday a factor exacerbating customers’ monetary distress. Appropriately, limiting use of pay day loans will be likely to reduce delinquencies on conventional credit items. We try out this implication for the theory by analyzing delinquencies on revolving, retail, and installment credit in Georgia, vermont, and Oregon. These states paid down availability of pay day loans by either banning them outright or capping the charges charged by payday lenders at a level that is low. We find little, mostly good, but frequently insignificant alterations in delinquencies following the pay day loan bans. In Georgia, but, we find blended evidence: a rise in revolving credit delinquencies but a decrease in installment credit delinquencies.