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Just How Do Payday Advances Affect Borrowers? Proof through the U.K. Market

Just How Do Payday Advances Affect Borrowers? Proof through the U.K. Market

Abstract

Pay day loans are controversial high-cost, short-term borrowing products, banned in lots of U.S. states. But debates surrounding their advantages to consumers carry on. We review the results of payday advances on customers by making use of a distinctive information set including 99% of loans authorized in britain more than a two-year duration matched to credit files. Making use of a regression discontinuity research design, our outcomes show that payday loans offer short-lived liquidity gains and encourage consumers to defend myself against credit that is additional.