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Regulation and Recent Trends in High-Interest Credit Markets

Authors
  • Malone, Carlie
  • Skiba, Paige Marta
Type
Published Article
Publisher
Annual Reviews
Publication Date
Oct 13, 2020
Volume
16
Pages
311–326
Identifiers
DOI: 10.1146/annurev-lawsocsci-051820-014626
Source
Annual Reviews
Keywords
License
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Abstract

In this article we review the contested effects of traditional payday loans on borrowers and describe recent regulatory changes to the product. We then provide detail on the institutional features and regulation—to the extent that there is any—of new products emerging to fill demand that remains when payday loans are more strictly regulated. Little is known about the effects of these new loan products on borrowers. What is certain is that state restrictions have led lenders to modify their loans to narrowly evade restrictions on interest rates, loan lengths, loan sizes, and repayment procedures like allowing loans to roll over. We focus on the starkest changes to small-dollar credit regulation that have occurred recently, including the development of high-interest installment loans, so-called flex loans offered by payday lenders, and the fintech creation of earned wage advance products.

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