Abstract
In 2012, Texas and two municipalities therein adopted regulations governing the payday loan market. Austin and Dallas enacted supply restrictions limiting the loan-to-income ratio and mandating amortization. The state adopted an information disclosure inspired by Bertrand and Morse (2011) presenting the cost and typical usage of payday loans in easy-to-understand terms. We find that the municipal restrictions led to a 61% decline in loan volume in Austin and a 44% decline in Dallas, with the effects driven by the start of enforcement. The statewide disclosures led to a persistent 12% decline in loan volume in the first six months.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 489-507 |
| Number of pages | 19 |
| Journal | Journal of Financial Economics |
| Volume | 145 |
| Issue number | 2 |
| DOIs | |
| State | Published - Aug 2022 |
Keywords
- Disclosure
- Enforcement
- Financial regulation
- Payday lending
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management