A Comparative Analysis of Payday Loan Customers

18 Pages Posted: 18 Apr 2008  

Edward C. Lawrence

University of Missouri at Saint Louis - College of Business Administration

Gregory Elliehausen

George Washington University - Financial Services Research Program

Abstract

One of the most rapidly growing and controversial forms of consumer lending to recently emerge in the marketplace has been payday advances. This form of credit allows the borrower to obtain a small amount of cash for a short period of time. Claims of predatory lending often arise due to the high annual percentage rates that result from the fees for borrowing small amounts of money for 2 wk or less. By analyzing the data collected in a national survey of payday customers, this research allows policymakers to better understand what type of consumer borrows from payday lenders, for what purpose, and what the true benefits and costs are. The results confirm a strong demand for payday loans that satisfy a real financial need within a certain segment of the population.

JEL Classification: D12, D18, G20

Suggested Citation

Lawrence, Edward C. and Elliehausen, Gregory, A Comparative Analysis of Payday Loan Customers. Contemporary Economic Policy, Vol. 26, Issue 2, pp. 299-316, April 2008. Available at SSRN: https://ssrn.com/abstract=1120556 or http://dx.doi.org/10.1111/j.1465-7287.2007.00068.x

Edward C. Lawrence (Contact Author)

University of Missouri at Saint Louis - College of Business Administration ( email )

One University Blvd.
487 SSB
St. Louis, MO 63121
United States
314-516-5881 (Phone)
314-516-6420 (Fax)

Gregory Elliehausen

George Washington University - Financial Services Research Program ( email )

Duques Hall, Suite 551
2201 G Street, NW
Washington, DC 20052
United States
202-994-0892 (Phone)
202-994-0907 (Fax)

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