Government Book Board
Stanford Legislation School
High-interest payday loans have proliferated in the last few years; therefore too has efforts to control them. Yet exactly just how borrowers react to regulations that are such mainly unknown. Drawing on both administrative and study information, we exploit variation in payday-lending guidelines to examine the result of pay day loan limitations on customer borrowing. We discover that although such policies work well at reducing lending that is payday customers react by moving with other forms of high-interest credit (as an example, pawnshop loans) in place of conventional credit instruments (as an example, bank cards). Such moving exists, but less pronounced, for the payday that is lowest-income people.