| 来源类型 | Working Paper
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| 规范类型 | 报告
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| DOI | 10.3386/w27783
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| 来源ID | Working Paper 27783
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| Does Increasing Access to Formal Credit Reduce Payday Borrowing? |
| Sarah Miller; Cindy K. Soo
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| 发表日期 | 2020-09-07
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| 出版年 | 2020
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| 语种 | 英语
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| 摘要 | The use of high cost “payday loans” among subprime borrowers has generated substantial concern among policymakers. This paper provides the first evidence of substitution between “alternative” and “traditional” credit by exploiting an unexpected positive shock to traditional credit access among payday loan borrowers: the removal of a Chapter 7 bankruptcy flag. We find that the removal of a bankruptcy flag on a credit report results in a sharp increase in access to traditional credit and raises credit scores, credit card limits, and approval rates. However, despite meaningful increases in access to traditional credit, we find no evidence that borrowers reduce their use of payday loans, and our confidence intervals allow us to rule out even very small reductions in payday borrowing. Furthermore, we find evidence that flag removals increase the use of other alternative credit products such as online subprime installment loans. These results indicate that marginally improving access to less expensive formal credit is insufficient to meaningfully shift borrowers away from high cost subprime products. We discuss likely explanations for this including increased marketing of subprime products associated with the flag removal, the imperfect substitutability between cash and credit for low income borrowers, and an insufficiency in the size of the increase in credit access associated with the flag removal. |
| 主题 | Financial Economics
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| URL | https://www.nber.org/papers/w27783
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| 来源智库 | National Bureau of Economic Research (United States)
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| 引用统计 |
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/585454
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推荐引用方式
GB/T 7714 |
Sarah Miller,Cindy K. Soo. Does Increasing Access to Formal Credit Reduce Payday Borrowing?. 2020.
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文件名：
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w27783.pdf
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格式：
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Adobe PDF
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