Prohibitions, Price Caps, and Disclosures: A Look at State Policies and Alternative Financial Product Use

Abstract

Using new nationally representative data from the National Financial Capability State-by-State Survey, this paper examines the relationship between state-level alternative financial service (AFS) policies (prohibitions, price caps, disclosures) and consumer use of five AFS products: payday loans, auto title loans, pawn broker loans, RALs, and RTO transactions. The results suggest that more stringent price caps and prohibitions are associated with lower product use and do not support the hypothesis that prohibitions and price caps on one AFS product lead consumers to use other AFS products.

Keywords: Economy/Taxes, Families and Parenting, Poverty and Safety Net, Race/Ethnicity/Gender