14 Apr HighвЂђCost Credit and Consumption Smoothing. This paper had been previously circulated as вЂњFor Better and for even worse?
We thank the editor, Robert DeYoung, an anonymous referee, Todd Gormley, Mark Jenkins, Paul Landefeld, Donald Morgan, Nick Roussanov, Luke Taylor, and Jeremy Tobacman for helpful feedback, in addition to seminar participants during the Wharton class, the GW/FRB/GFLEC Financial Literacy Seminar therefore the Consumer Expenditure Survey Microdata Workshop. I will be grateful to Jimmy Lee, Ryan PfirrmannвЂђPowell, Geoffrey Paulin, Arcenis Rojas, as well as others within the Division associated with Consumer Expenditure Survey during the Bureau of Labor Statistics for support accessing the Consumer that is confidential Expenditure files, and I also have always been grateful to Paul Amos associated with Wharton GIS lab for advice about GIS. The Jay H. Baker Retailing Center in the Wharton class offered good support that is financial the task before the author’s work because of the Federal Reserve. Results of Usage Of HighвЂђCost Credit Rating.вЂќ The analysis and conclusions expressed in this paper are the ones regarding the writer plus don’t fundamentally mirror the views for the Board of Governors associated with Federal Reserve System, its users, or its staff. This research ended up being carried out with limited use of Bureau of Labor Statistics (BLS) information. The views right here try not to fundamentally mirror the views associated with BLS.
In this paper, We reveal that highвЂђcost credit helps households smooth usage after durations of short-term economic stress. After experiencing distressвЂ”that is, extreme weather eventsвЂ”I discover that access to highвЂђcost payday lending mitigates declines in overall investing and nondurable products spending generally. The outcomes are especially concentrated among households with an increased tendency to make use of payday credit or that have actually restricted alternatives: lower income households, households with lower than a college degree, and households with lower levels of preserving. These results highlight the consumptionвЂђsmoothing part that highвЂђcost credit plays for households with restricted use of other styles of credit.
Wide range of times cited based on CrossRef: 4
- Kabir Dasgupta, Brenden J. Mason, the end result of Interest Rate Caps on Bankruptcy: Synthetic Control proof from current Payday Lending Bans, Journal of Banking & Finance, 10.1016/j.jbankfin.2020.105917, (105917), (2020).
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