So in the state that didn’t pass it, payday lending went on as before
But Zinman’s research went beyond that basic fact. The state of Washington, Oregon’s neighbor to the north, had considered passing a similar law that would cap interest rates, but it didn’t.
https://loansolution.com/title-loans-nc/
ZINMAN: And so we have a setup for a nice natural experiment there. You have two neighboring states, similar in a lot of ways. One passed a law, another considered passing a law, but didn’t quite pass it.
And this let Zinman compare data from the two states to see what happens, if anything, when payday-loan shops go away. He looked at data on bank overdrafts, and late bill payments and employment; he looked at survey data on whether people considered themselves better or worse off without access to payday loans.
ZINMAN: And in that study, in that data, I find evidence that payday borrowers in Oregon actually seemed to be harmed. They seemed to be worse off by having that access to payday loans taken away. And so that’s a study that supports the pro-payday loan camp.
That’s pretty compelling evidence in favor of payday loans. (más…)