Payday lending, crime, and bankruptcy: Is there a connection?

The payday lending industry has been the subject of controversy over the years. This is largely due to the high fee structure of payday loans and the view of some that the industry targets economically vulnerable groups. For these reasons, some states prohibit payday lending, while others impose reg...

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Bibliographic Details
Published in:The Journal of consumer affairs 2020-12, Vol.54 (4), p.1159-1177
Main Authors: Barth, James R., Hilliard, Jitka, Jahera, John S., Lee, Kang B., Sun, Yanfei
Format: Article
Language:English
Subjects:
Bankruptcy
Crime prevention
Loans
payday lending
Payday loans
Property
Property crime
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Summary:The payday lending industry has been the subject of controversy over the years. This is largely due to the high fee structure of payday loans and the view of some that the industry targets economically vulnerable groups. For these reasons, some states prohibit payday lending, while others impose regulatory restrictions on their operations. Despite the prohibitions and restrictions, the industry nonetheless serves a significant segment of the U.S. population. Our purpose is to determine whether in addition to providing loans to individuals, access to payday lenders is associated with less property crime and fewer bankruptcies. Using a unique data set obtained directly from all state regulatory authorities, we find evidence, contrary to some earlier studies, that the presence of payday lenders may help reduce property crime as well as personal bankruptcies.
ISSN:0022-0078
1745-6606
DOI:10.1111/joca.12318