Monday, February 18, 2008

Pay day loans

From Newmark's door and interesting piece on pay day loans. These loans are widely viewed as being some sort of evil money grabbing scheme that exploits the poor. The study finds that pay day loan providers really don't make abnormally high returns. The reality is that the pay day loan business is expensive to operate.

A policy implication then, is that by imposing rate limits, the supply of pay day loans will decline.