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Pay day loans are controversial high-cost, short-term financial products, prohibited in lots of U.S. states.

Pay day loans are controversial high-cost, short-term financial products, prohibited in lots of U.S. states.

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But debates surrounding their advantageous assets to consumers carry on. We assess the results of pay day loans on customers by making use of a unique data set including 99% of loans authorized in the uk over a two-year duration matched to credit files. Utilizing a regression discontinuity research design, our outcomes show that payday advances offer short-lived liquidity gains and encourage consumers to battle extra credit. Nevertheless, when you look at the following months, pay day loans cause persistent increases in defaults and cause customers to meet or exceed their bank overdraft limitations. Continue reading Pay day loans are controversial high-cost, short-term financial products, prohibited in lots of U.S. states.