Time to Repay or Time to Delay? The Effect of Having More Time before a Payday Loan Is Duet

• 成果类型: Article
• 署名作者: Carter, Susan Payne; Liu, Kuan; Skiba, Paige Marta; Sydnor, Justin
• 署名单位: United States Department of Defense; United States Army; United States Military Academy; University of Arkansas System; University of Arkansas Fayetteville; Vanderbilt University; University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.20180721
• 发表日期: 2022
• 页码: 91-126
• 关键词: consumer-behavior; liquidity; access; MODEL; debt

摘要

We examine the effect of state laws on minimum payday loan dura-tions that give some borrowers an additional pay cycle to repay their initial loan with no other changes to contract terms. Neoclassical models predict this grace period would reduce borrowers' need for costly loan rollovers. However, in reality, borrowers' repayment behavior with grace periods is very similar to borrowers with shorter loans, merely pushed out a few weeks. Potential explanations include heuristic repayment decisions and naive present focus. A calibrated model suggests that present-focused borrowers get less than one-half of the benefit from a grace period that time-consistent borrowers would. (JEL G23, G51)