Do state regulations affect payday lender concentration?

Barth, James R.; Hilliard, Jimmy E.; Jahera, John S.; Sun, Yanfei

doi:10.1016/j.jeconbus.2015.08.001

Cited by 29 publications

(20 citation statements)

References 11 publications

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“…Additionally, greater presence of alternative financial service providers in neighborhoods with higher proportions of black and Latino residents (Barth et al 2016;Despard et al 2017a;Fowler et al 2014;Hegerty 2016;Prager 2014;Temkin and Sawyer 2004) may help explain higher use by black and Latino households of high-cost loans in response to financial emergencies (Roll et al 2018). Use of these loans may exact financing costs that crowd out purchasing power for meeting basic needs for housing, food, and health care.…”

Section: Differences In Financial Stability By Race and Ethnicitymentioning

confidence: 99%

Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race

et al. 2018

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Low-and moderate-income (LMI) households need financial assets to help cope with income and expenditure shocks. Prior research identifies racial differences in wealth and wealth effects. We examined whether these gaps and effects exist for liquid financial assets. Using group invariance tests in structural equation modeling, we assessed the relationship between financial shocks and material hardship, as mediated by liquid financial assets and moderated by race/ethnicity among a sample of LMI tax filers (N = 7544). Though most study participants were employed (71%), average income was only $18,055 and average liquid financial assets was $4701. Black households had $2774 less in liquid financial assets compared to white households (p < .001) after controlling for income and other factors. Model fit for the final moderated mediation model was excellent (RMSEA = 0.026, 90% C. I. [0.020, 0.033], CFI = 0.977). The mediating effect of liquid financial assets was 10.4% for white, but only 3.6 and 4.4% for black and Latino households, respectively. That is, the proportion of the relationship between shocks and hardship mediated by liquid financial assets varied by race/ethnicity. Policies aimed at helping LMI households build emergency savings such as tax refund savings matches may be less likely to benefit black and Latino households than white households, suggesting the need for other policies to address this form of the racial wealth gap.

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Section: Differences In Financial Stability By Race and Ethnicitymentioning

confidence: 99%

Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race

et al. 2018

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“…Last, a covariate was added for whether participants lived in one of 11 states (including District of Columbia) where payday lending is legally banned (i.e., “1” if in a state with a ban; “0” if not). Data concerning state bans were derived from a study by Barth et al ().…”

Section: Methodsmentioning

confidence: 99%

Effects of a Tax‐Time Savings Intervention on Use of Alternative Financial Services among Lower‐Income Households

Despard

Grinstein‐Weiss

Ren

et al. 2016

Journal of Consumer Affairs

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Alternative financial services (AFS) such as check cashing and payday loans may help unbanked households meet transaction and credit needs, yet often at a very high price. Saving tax refunds can help low‐ and moderate‐income (LMI) households build emergency savings as a way to reduce dependence on AFS and cope effectively with irregular cash flows and financial shocks. This study examined the impact on AFS use of message‐based interventions encouraging LMI households to save their refunds when they electronically filed their federal income tax returns. We found that 3 out of 18 interventions resulted in statistically significant reductions in credit‐related AFS use with small effect sizes. None of the interventions resulted in reduced transaction‐related AFS use. Other factors—especially prior AFS use and financial shocks—were strong predictors of AFS. Financially vulnerable households may need additional opportunities and protections to reduce dependence on AFS.

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“…In 2000, an estimated 10,000 payday‐lending storefronts operated nationwide, and more than doubled to 22,000 locations by 2004 (Flannery and Samolyk ). There were approximately 24,000 branches in 2007, declining to an estimated 19,700 by 2010, and in 2016 there were approximately 16,000 operating payday lending branches nationwide (Barth et al ; Consumer Federation of America ). Between 2003 and 2007, loan volume increased from an estimated $40 billion to $45 billion.…”

Section: Payday Lendingmentioning

confidence: 99%

“…Supply‐side research on the payday‐lending industry thus far has been focused on the market effects of increased policy. Barth et al () examine cross‐section data and find payday lending outlets are less concentrated in states with more stringent policies . Carter () examines the cross‐product effects of renewal limits, finding higher concentrations of pawnshop outlets bordering states with limitations on payday‐loan rollovers and renewals.…”

Section: Payday Lendingmentioning

confidence: 99%

Regulation and the Payday Lending Industry

Ramirez

2020

Contemporary Economic Policy

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Using a unique, multistate data set and exploiting policy heterogeneity across states and time, I examine average and marginal effects of changing payday‐lending policies on county‐month‐level branch counts between January 2001 and December 2010. Average results on operating branches are mixed: the effects of adopting liquidity requirements and fee ceilings are negative while the effects of adopting balance and rollover limits are positive. Adopting balance limits decreases new branch counts. Marginal effects of relaxing rollover ceilings are positive for operating branches, though negative for new branches. Results highlight the need to consider both consumer‐ and producer‐interest perspectives when examining the relationship between industry and regulation. (JEL L22, G28, D22)

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Do state regulations affect payday lender concentration?

Cited by 29 publications

References 11 publications

Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race

Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race

Effects of a Tax‐Time Savings Intervention on Use of Alternative Financial Services among Lower‐Income Households

Regulation and the Payday Lending Industry

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