Less Mainstream Credit, More Payday Borrowing? Evidence from Debt Collection Restrictions

• 成果类型: Article
• 署名作者: Fonseca, Julia
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13189
• 发表日期: 2023
• 页码: 63-103
• 关键词: bankruptcy; MARKET

摘要

Governments regulate debt collectors to protect consumers from predatory practices. These restrictions may lower repayment, reducing the supply of mainstream credit and increasing demand for alternative credit. Using individual credit record data and a difference-in-differences design comparing consumers in states that tighten restrictions on debt collection to those in neighboring states that do not, I find that restricting collections reduces access to mainstream credit and increases payday borrowing. These findings provide new evidence of substitution between alternative and mainstream credit and point to a trade-off between shielding consumers from certain collection practices and pushing them into higher cost payday lending markets.