A Behavioral Economic Analysis of Payday Lending Regulation in Canada PDF Download

Author: Aiden Talai
Publisher:
ISBN:
Category : Consumer credit
Languages : en
Pages : 152

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Author: Jerry Buckland
Publisher: Springer
ISBN: 3319712136
Category : Business & Economics
Languages : en
Pages : 257

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Book Description
This book analyzes the highly contentious payday lending industry, presenting valuable new data collected during Canada's recent regulatory reviews and demonstrating its relevance to payday lending conversations taking place worldwide. The authors treat the industry with a balanced hand by establishing its importance as an example of financialization and acknowledging the complex impact of payday lending services on low-income and credit-constrained clients. Up-to-date data from an interdisciplinary mix of financial, econometric, legal, behavioral economic, and socioeconomic sources—all in the context of an established Canadian industry—provide both proponents and opponents of payday lending with valuable evidence for their discussions of how much regulation is required to minimize harmful consequences. These insights from Canada expand a US-centric conversation and provide a key resource for the growing list of countries in which the industry is present, from the UK and Poland to South Africa and Australia.

Author: Hunt Allcott
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
It is often argued that people might take on too much high-cost debt because they are present focused and/or overoptimistic about how soon they will repay. We measure borrowers' present focus and overoptimism using an experiment with a large payday lender. Although the most inexperienced quartile of borrowers underestimate their likelihood of future borrowing, the more experienced three quartiles predict correctly on average. This finding contrasts sharply with priors we elicited from 103 payday lending and behavioral economics experts, who believed that the average borrower would be highly overoptimistic about getting out of debt. Borrowers are willing to pay a significant premium for an experimental incentive to avoid future borrowing, which we show implies that they perceive themselves to be time inconsistent. We use borrowers' predicted behavior and valuation of the experimental incentive to estimate a model of present focus and naivete. We then use the model to study common payday lending regulations. In our model, banning payday loans reduces welfare relative to existing regulation, while limits on repeat borrowing might increase welfare by inducing faster repayment that is more consistent with long-run preferences.

Author: William B. Kluska
Publisher:
ISBN:
Category :
Languages : en
Pages : 76

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Author: Jocelyn Everett
Publisher:
ISBN:
Category : Check cashing services
Languages : en
Pages : 75

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Book Description
Payday lending has been a topic of great debate in the US and other developed countries. While some argue that lenders prey on low income and minority populations and trap them in a cycle of debt, others maintain that payday loans fulfill an otherwise unmet need for those in unexpected financial distress. Furthermore, although a consensus has not yet been reached concerning why, there exists a population of payday loan borrowers who continue to roll over short-term loans in an effort to solve their long-term financial problems. This is of particular concern to the field of social work because as this population becomes increasingly impoverished, they will be at greater risk for ill-health, loss of housing, and loss of employment. Further, as social workers, we have a responsibility to recognize social injustices when they arise and to pursue changes to rectify them. This thesis applies methods of social problem analysis and value-critical analysis to examine the problem of economic dependence as it intersects with payday lending practices and to analyze the policies and programs of three states with differing underlying theoretical assumptions about human behavior and the role of state regulation: Montana, Florida, and Wisconsin. Definitions, relevant human behavior theories, a review of the literature, and a historical overview of policy governing payday lending are presented as part of the initial social problem analysis. Value-critical analysis continues as the author describes policy or program elements, then critically evaluates all of the parts, individually and as a whole, to identify any shortcomings, inconsistencies in logic, or ambiguities in everyday policy or program operations (Chambers & Bonk, 2013). The thesis concludes with a summary of conclusions from the analysis and discussion of implications for future policies targeting payday lending. The policy analysis supports the following conclusions. The regulation analyzed in Montana lacks a coherent program design and is unlikely to meet its goal of protecting citizens from short-term, high-rate loans due its inconsistency in regulations of payday loans as compared to other high-rate loans available in the state. Florida's regulation describes an intent to decrease residents' reliance on payday loans, but instead provided avenues for the payday lending industry to flourish throughout the state and resulted in a steady increase in the number of unique payday loan borrowers and the number of loans taken per borrower year over year. The regulation in Florida also generates a significant amount of money for the state each year, which indicates an additional incentive to allow the industry's continued growth. Due to Wisconsin's lack of regulatory legislation, the solutions analyzed are two community-driven programs that were found to be strategically planned, with clear goals and measureable objectives. The Wisconsin programs are well designed, but may require more diversified funding in order to be sustainable. Future comparative analysis of regulatory and community-driven solutions is needed. Implications for future policy include expanding the scope from payday lending to the larger fringe-banking industry, providing a mechanism for lower-income families to build savings while paying off debt, and evaluating revenue-generating tools and measureable objectives for effectiveness in achieving overarching goals.

Author:
Publisher:
ISBN:
Category : Consumer protection
Languages : en
Pages : 0

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Author: Jodi Gardner
Publisher: Bloomsbury Publishing
ISBN: 1509939377
Category : Law
Languages : en
Pages : 265

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Book Description
This book proposes a new way of thinking about the controversial and complex challenges associated with the regulation of high-cost credit, specifically payday lending. These products have received significant attention in both the media and political arena. The inadequacy of regulatory interventions has created ongoing problems with the provision of high-cost credit, particularly for consumers with lesser bargaining power and who are already financially vulnerable. The book tackles two specific gaps in the existing literature. The first involves inadequate analysis of the relevant philosophical concepts around high-cost credit, which can result in an over-simplification of what are particularly complex issues. The second is a lack of engagement in both the market and lived experience of borrowers, resulting in limited understanding of those who use these financial products. The Future of High-Cost Credit explores the theoretical grounding, policy initiatives and interdisciplinary perspectives associated with high-cost credit, making a novel and insightful contribution to the existing literature. The problems with debt extend far beyond the legal sphere, and the book will therefore be of interest to many other academic disciplines, as well as for those working in public policy and 'the third sector'.

Author:
Publisher: World Bank Publications
ISBN: 0821372823
Category : Adaptation (Biology)
Languages : en
Pages : 135

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Book Description
This first report deals with some of the major development issues confronting the developing countries and explores the relationship of the major trends in the international economy to them. It is designed to help clarify some of the linkages between the international economy and domestic strategies in the developing countries against the background of growing interdependence and increasing complexity in the world economy. It assesses the prospects for progress in accelerating growth and alleviating poverty, and identifies some of the major policy issues which will affect these prospects.

Author: Shlomo Benartzi
Publisher: Penguin
ISBN: 110158033X
Category : Business & Economics
Languages : en
Pages : 288

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Book Description
One of the world’s top experts in behavioral finance offers innovative strategies for improving 401(k) plans. Half of Americans do not have access to a retirement saving plan at their workplace. Of those who do about a third fail to join. And those who do join tend to save too little and often make unwise investment decisions. In short, the 401(k) world is in crisis, and workers need help. Save More Tomorrow provides that help by focusing on the behavioral challenges that led to this crisis inertia, limited self-control, loss aversion, and myopia—and transforms them into behavioral solutions. These solutions, or tools, are based on cutting edge behavioral finance research and they can dramatically improve outcomes by, for example, helping employees: -Save, even if they aren’t ready to do so now, by using future enrollment. -Save more by showing them images of their future selves. -Save smarter by reshuffling the order of funds on the investment menu. Save More Tomorrow is the first comprehensive application of behavioral finance to improve retirement outcomes. It also makes it easy for plan sponsors and their advisers to apply these behavioral tools using its innovative Behavioral Audit process.

Author:
Publisher: World Bank Publications
ISBN: 0821377558
Category : Business & Economics
Languages : en
Pages : 108

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Book Description
Banking the Poor explores level and determinants of financial access in 54 countries, mostly in Africa. It collects information from two sources: central banks and leading commercial banks in each surveyed country. It explores associations between countries' banking policies and practices and their levels of financial access, measured in terms of the numbers of bank account per thousand adults. It builds on the previous work measuring financial access through information from regulators, from banks, and also from users' perspectives in household surveys.