Sixteen states and the District of Columbia currently ban payday lending, short-term small-dollar loans typically associated with annualized interest rates above 200%. Five states and the District of Columbia have initiated payday lending bans within the past four years. A multivariate regression analysis using court district-level bankruptcy data (n=90) from 2006 to 2009, along with indicator variables for payday lending bans and demographic and economic control variables, tests for the effect of payday lending authorization on Chapter 7 (liquidation) and Chapter 13 (debt repayment) bankruptcy rates. While cross-sectional and year-effects models demonstrate a statistically significant increase in Chapter 7 bankruptcies where payday lending is permitted, there is no link with regard to Chapter 13. Once individual district effects are accounted for in a fixed-effects model, there is no measurable impact of recent payday lending bans, and a Hausman test rejects statistically significant random effects models. Despite limitations inherent in fixed-effects estimation, it is possible that there is a long-term relationship between permitting payday lending and higher bankruptcy rates, as suggested by other model specifications. Recommendations for further analysis include greater use of individual-level and industry data, exploration of the factors leading to states’ legislative action on payday lending, and a more thorough examination of the confounding relationship that both African-Americans and Native Americans have with the bankruptcy process.
|Department:||Public Policy & Policy Management|
|School Location:||United States -- District of Columbia|
|Source:||MAI 48/05M, Masters Abstracts International|
|Subjects:||Economics, Political science, Public policy|
|Keywords:||Bankruptcy, Consumer protection, Financial access, Payday lending, Short-term lending, State regulation|
Copyright in each Dissertation and Thesis is retained by the author. All Rights Reserved
The supplemental file or files you are about to download were provided to ProQuest by the author as part of a
dissertation or thesis. The supplemental files are provided "AS IS" without warranty. ProQuest is not responsible for the
content, format or impact on the supplemental file(s) on our system. in some cases, the file type may be unknown or
may be a .exe file. We recommend caution as you open such files.
Copyright of the original materials contained in the supplemental file is retained by the author and your access to the
supplemental files is subject to the ProQuest Terms and Conditions of use.
Depending on the size of the file(s) you are downloading, the system may take some time to download them. Please be