High‐Cost Credit and Consumption Smoothing. This paper ended up being previously circulated as “For Better and for even worse?

High‐Cost Credit and Consumption Smoothing. This paper ended up being previously circulated as “For 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 remarks, in addition to seminar participants during the Wharton class, the GW/FRB/GFLEC Financial Literacy Seminar additionally the Consumer Expenditure Survey Microdata Workshop. I will be grateful to Jimmy Lee, Ryan Pfirrmann‐Powell, Geoffrey Paulin, Arcenis Rojas, among others within the Division associated with the Consumer Expenditure Survey in the Bureau of Labor Statistics for help accessing the private Consumer Expenditure Survey files, and I also have always been grateful to Paul Amos of this Wharton GIS lab for advice about GIS. The Jay H. Baker Retailing Center during the Wharton class offered large support that is financial the task before the writer’s work with all the Federal Reserve. Aftereffects of https://speedyloan.net/payday-loans-wy Use Of High‐Cost Credit.” The analysis and conclusions expressed in this paper are the ones regarding the writer plus don’t fundamentally mirror the views of this Board of Governors of this Federal Reserve System, its users, or its staff. This research was carried out with limited use of Bureau of Labor Statistics (BLS) information. The views right here usually do not always mirror the views associated with BLS.


In this paper, We show that high‐cost credit helps households smooth usage after periods of short-term economic stress. After experiencing distress—that is, extreme climate events—I realize that access to high‐cost payday lending mitigates declines in general investing and nondurable items investing generally speaking. The outcomes are especially concentrated among households with a greater tendency to make use of payday credit or that have actually restricted alternatives: low income households, households with lower than a college level, and households with lower levels of preserving. These outcomes highlight the consumption‐smoothing part that high‐cost credit plays for households with restricted usage of other forms of credit.

Quantity of times cited based on CrossRef: 4

  • Kabir Dasgupta, Brenden J. Mason, the consequence 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).

Please be aware: The publisher just isn’t in charge of this content or functionality of every supporting information provided by the writers. Any questions (apart from missing content) should always be directed towards the corresponding writer for the content.


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