Changes in the Payday Lending Industry: Does Regulation Depend Solely on Which Party Holds Power?

8 Pages Posted: 25 Aug 2015 Last revised: 10 Oct 2015

See all articles by James R. Barth

James R. Barth

Auburn University; Milken Institute

Gerard Caprio

Williams College

Moutusi Sau

Milken Institute

Date Written: August 24, 2015


Payday lenders are not everyone's favorite firms. Many individuals consider the typical 300 to 400 percent interest rate that they charge typically on a $300 two-week loan outrageously high. Many assert that payday lenders are engaging in predatory lending because relatively low-income and less-educated individuals are getting the loans and paying the high rates. The response of the payday lending industry to these concerns is that their customers take out such loans due to financial distress and are charged high-interest rates because they are riskier than other borrowers. Given all the focus on the two political parties these days and the current controversy over the payday lending industry, it seems only appropriate to examine whether Democrats or Republicans are more favorably disposed to this industry. We do this by first determining which of the two political parties controls the Governorship and Senate and House of the Legislature in each of the states and then by examining the degree of stringency imposed on the operations of payday lenders associated with the different parties in those states.

Keywords: Payday Lending, Predatory Lending

JEL Classification: G21, G28, G29, N2

Suggested Citation

Barth, James R. and Caprio, Gerard and Sau, Moutusi, Changes in the Payday Lending Industry: Does Regulation Depend Solely on Which Party Holds Power? (August 24, 2015). Available at SSRN: or

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

Gerard Caprio

Williams College ( email )

Williamstown, MA 01267
United States
413-597-2465 (Phone)
413-597-4045 (Fax)

Moutusi Sau (Contact Author)

Milken Institute ( email )

1101 New York Avenue, NW
Washington, DC District of Columbia 20005
United States


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