New Study from Dartmouth Supports Payday Lending
November 17th, 2008
A new study from Dartmouth College suggests that restricting access to payday loans harms, rather than helps, consumers. The study, conducted by Prof. Jonathan Zinman, evaluated the impact of interest rate and loan term restrictions imposed by the State of Oregon in 2007. These restrictions caused most payday lenders to exit the state, reducing consumer access to short term loans.
The most important finding in the study is that, relative to their Washington counterparts, Oregon households were far more likely to experience a change for the worse in the key financial outcomes measured by the survey. It also finds evidence that some former payday borrowers turned to alternatives that can be even more costly than payday loans, such as overdrafts and late bill payments.
“Like some other studies, these results suggest that access to credit, even if expensive, can help some people make productive investments and help others manage their cash flows through emergencies,” Prof. Zinman said.
At ThinkCash, we are encouraged by the growing body of evidence confirming what our customers already know: A short term loan, when used responsibly, is a great way to avoid more expensive fees. We support sensible legislation and regulation that protects consumers from unscrupulous lenders, fosters competition, and doesn’t restrict access to the millions of consumers that rely on short term loans to make ends meet.
Click the link below to read the full study:
http://www.dartmouth.edu/~jzinman/Papers/Zinman_RestrictingAccess_oct08.pdf
