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

High‐Cost Credit and Consumption Smoothing. This paper ended up being formerly circulated as “For Better and for 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 feedback, along with seminar participants during the Wharton class, the GW/FRB/GFLEC Financial Literacy Seminar as well as 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 for the Consumer Expenditure Survey during the Bureau of Labor Statistics for support accessing the Consumer that is confidential Expenditure files, and I also am grateful to Paul Amos associated with Wharton GIS lab for help with GIS. The Jay H. Baker Retailing Center during the Wharton class supplied good support that is financial the task ahead of the writer’s work because of the Federal Reserve. Ramifications of Usage Of High‐Cost Credit Rating.” The analysis and conclusions expressed in this paper are the ones for the writer and never always reflect the views associated with Board of Governors regarding the Federal Reserve System, its people, or its staff. This research ended up being carried out with limited usage of Bureau of Labor Statistics (BLS) information. The views right here usually do not fundamentally reflect the views regarding the BLS.


In this paper, I reveal that high‐cost credit helps households smooth usage following durations of short-term monetary stress. After experiencing distress—that is, extreme climate events—I discover that access to high‐cost payday lending mitigates declines in general investing and nondurable items investing generally speaking. The outcomes are particularly concentrated among households with a higher tendency to make use of payday credit or that have actually restricted alternatives: low income households, households with significantly less 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 styles of credit.

Quantity of times cited in accordance with 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 the information or functionality of every information that is supporting by the writers. Any inquiries (apart from missing content) should really be directed to your matching writer for this article.


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