Do payday lending bans protect or constrain regional economies? Evidence from the Military Lending Act's final rule

Craig Wesley Carpenter; Kristopher Deming; John Anders; Michael Lotspeich-Yadao; Charles M. Tolbert; Adam Ingrao

doi:10.1111/coep.12636

Do payday lending bans protect or constrain regional economies? Evidence from the Military Lending Act's final rule

Craig Wesley Carpenter, Kristopher Deming, John Anders, Michael Lotspeich-Yadao, Charles M. Tolbert, Adam Ingrao

Research output: Contribution to journal › Article › peer-review

Abstract

The 2007 Military Lending Act attempted to ban high-interest loans to U.S. military members and the 2017 “Final Rule” further restricted access, causing regional shocks in payday lending exposure in counties with a military base. Difference-in-differences and dynamic estimators provide mixed evidence on the effect of this payday lending access shock on regional economic outcomes and local business outcomes. However, we consistently find statistically significant reduced entry and exit of firms. Given payday lenders congregate around low-income and minoritized populations analogously to how they congregated around military bases, these results provide policy implications for more general usury bans.

Original language	English (US)
Pages (from-to)	319-335
Number of pages	17
Journal	Contemporary Economic Policy
Volume	42
Issue number	2
Early online date	Dec 30 2023
DOIs	https://doi.org/10.1111/coep.12636
State	Published - Apr 2024

Keywords

high-interest
payday loans
regional economic development

ASJC Scopus subject areas

General Business, Management and Accounting
Economics and Econometrics
Public Administration

Online availability

10.1111/coep.12636License: CC BY

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abstract = "The 2007 Military Lending Act attempted to ban high-interest loans to U.S. military members and the 2017 “Final Rule” further restricted access, causing regional shocks in payday lending exposure in counties with a military base. Difference-in-differences and dynamic estimators provide mixed evidence on the effect of this payday lending access shock on regional economic outcomes and local business outcomes. However, we consistently find statistically significant reduced entry and exit of firms. Given payday lenders congregate around low-income and minoritized populations analogously to how they congregated around military bases, these results provide policy implications for more general usury bans.",

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Do payday lending bans protect or constrain regional economies? Evidence from the Military Lending Act's final rule

Abstract

Keywords

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