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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, prohibited in a lot of U.S. states. But debates surrounding their advantageous assets to consumers carry on. We assess the results of payday advances on customers through the use of a distinctive information set including 99% of loans authorized in the uk over a period that is two-year to credit files. Employing a regression discontinuity research design, our outcomes show that payday advances offer short-lived liquidity gains and encourage consumers to battle credit that is additional.