Do Consumers Need More Protection from Small‐Dollar Lenders? Historical Evidence and a Roadmap for Future Research

37 Pages Posted: 6 Oct 2020

See all articles by J. Brandon Bolen

J. Brandon Bolen

Mississippi College

Gregory Elliehausen

Board of Governors of the Federal Reserve System

Thomas Miller

Mississippi State University - Department of Finance and Economics; Consumers' Research

Date Written: October 2020

Abstract

We summarize the current debate surrounding four small‐dollar credit products: pawn loans, vehicle title loans, payday loans, and cash installment loans from finance companies. We review the contributions of scholars that inform this debate. We underscore that users of these products fit the description of those whom consumer credit models predict benefit from these products. Many studies find that, on average, consumer use of small‐dollar credit products is, at worst, innocuous. There are, however, findings of heterogeneity in borrowers' experiences. The disagreements surrounding these credit products and the difficulty in crafting the proper policy response stems from this heterogeneity. JEL

Suggested Citation

Bolen, J. Brandon and Elliehausen, Gregory and Miller, Thomas, Do Consumers Need More Protection from Small‐Dollar Lenders? Historical Evidence and a Roadmap for Future Research (October 2020). Economic Inquiry, Vol. 58, Issue 4, pp. 1577-1613, 2020, Available at SSRN: https://ssrn.com/abstract=3704405 or http://dx.doi.org/10.1111/ecin.12894

J. Brandon Bolen (Contact Author)

Mississippi College

Gregory Elliehausen

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2326 (Phone)

Thomas Miller

Mississippi State University - Department of Finance and Economics ( email )

Mississippi State, MS 39762
United States

Consumers' Research ( email )

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