Payday lending: new research and the big question

Payday lending is controversial. In the states that allow it, payday lenders make cash loans that are typically for $500 or less that the borrower must repay or renew on his or her next payday. The finance charge for the loan is usually 15 to 20 percent of the amount advanced, so for a typical two-week loan the annual percentage interest rate is about 400 percent. In this article, the author briefly describes the payday lending business and explains why it presents challenging public policy issues. The heart of this article, however, surveys recent research that attempts to answer what the author calls the "big question," one that is fundamental to the public policy dispute: Do payday lenders, on net, exacerbate or relieve customers' financial difficulties?Payday loans ; Public policy

The evolution of the Philadelphia Stock Exchange

In "The Evolution of the Philadelphia Stock Exchange," one of our visiting scholars, Swarthmore College professor John Caskey, explains some of the factors that account for the PHLX's long life. Although Caskey focuses on the evolution of the PHLX, he also profiles some of the seismic shifts in U.S. securities markets in recent decades and illuminates the role of the largely overlooked regional stock exchanges.Stock exchanges

Check-cashing outlets in a changing financial system

This paper discusses changes in the financial sector that threaten traditional check-cashing outlets (CCOs). Specifically, the paper focuses on four developments that may radically alter the check-cashing industry over the coming decade: the growing use of electronic payments, the deployment of automated check-cashing machines, the rise of payday lending, and the development of "bank/CCO hybrids."Checks

Payday Lending: New Research And The Big Question

Payday lending is controversial. In the states that allow it, payday lenders make cash loans that are typically for $500 or less, and the borrower must repay or renew the loan on his or her next payday. The finance charge for the loan is usually 15 to 20 percent of the amount advanced, so for a typical two-week loan the annual percentage interest rate is about 400 percent. This article describes the payday-lending business and explains why it presents challenging public-policy issues. It surveys recent research that attempts to answer the “big question,” one that is fundamental to the public-policy dispute: Do payday lenders, on net, exacerbate or relieve customers\u27 financial difficulties? The article argues that despite research efforts of a talented group of economists, we still don\u27t know the answer to the big question