Restricting Consumer Credit Access: Household Survey Evidence on Effects around the Oregon Rate Cap

24 Pages Posted: 2 Feb 2009

See all articles by Jonathan Zinman

Jonathan Zinman

Dartmouth College; Innovations for Poverty Action; Jameel Poverty Action Lab; National Bureau of Economic Research (NBER)

Date Written: December 2008

Abstract

Many policymakers and some behavioral models hold that restricting access to expensive credit helps consumers by preventing overborrowing. I examine some short-run effects of restricting access, using household panel survey data on payday loan users collected around the imposition of binding restrictions on payday loan terms in Oregon. The results suggest that borrowing fell in Oregon relative to Washington, with former payday loan users shifting partially into plausibly inferior substitutes. Additional evidence suggests that restricting access caused deterioration in the overall financial condition of the Oregon households. The results suggest that restricting access to expensive credit harms consumers on average.

Keywords: payday loan, subprime credit market, predatory lending, usury, interest rate

Suggested Citation

Zinman, Jonathan, Restricting Consumer Credit Access: Household Survey Evidence on Effects around the Oregon Rate Cap (December 2008). Available at SSRN: https://ssrn.com/abstract=1335438 or http://dx.doi.org/10.2139/ssrn.1335438

Jonathan Zinman (Contact Author)

Dartmouth College ( email )

Hanover, NH 03755
United States
603-646-0075 (Phone)

HOME PAGE: http://https://sites.dartmouth.edu/jzinman/

Innovations for Poverty Action

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Jameel Poverty Action Lab

E60-246
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Cambridge, MA 02139
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National Bureau of Economic Research (NBER)

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