Much Ado About Nothing? New Evidence on the Effects of Payday Lending on Military Members

Abstract

We evaluate the effect that payday loan access has on credit and labor market outcomes of individuals in the U.S. Army. Using the conditional random assignment of service members to different locations, we employ three identification strategies: cross-sectional variation in state policies, within-term variation in payday lending access, and a difference in- difference analysis using the national Military Lending Act. We find few adverse effects of payday loan access on service members when using any of these methods, even when we examine dozens of subsamples that explore potential differential treatment effects.

Keywords: payday lending, military lending act, household finance

JEL Classification: G2, D14, D12, G18