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

I 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, along with seminar participants during the Wharton class, the GW/FRB/GFLEC Financial Literacy Seminar plus the Consumer Expenditure Survey Microdata Workshop. I will be grateful to Jimmy Lee, Ryan Pfirrmann‐Powell, Geoffrey Paulin, Arcenis Rojas, among others into 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 have always been grateful to Paul Amos associated with Wharton GIS lab for advice about GIS. The Jay H. Baker Retailing Center in the Wharton class offered large support that is financial the task ahead of the writer’s work utilizing the Federal Reserve. Aftereffects of Use Of High‐Cost Credit Rating.” The analysis and conclusions expressed in this paper are the ones of this writer and never always reflect the views of this Board of Governors associated with Federal Reserve System, its people, or its staff. This research was carried out with limited usage of Bureau of Labor Statistics (BLS) information. The views right here don’t fundamentally mirror the views for the BLS.


In this paper, We reveal that high‐cost credit helps households smooth consumption after durations of short-term economic 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 outcome are especially concentrated among households with an increased propensity to make use of credit that is payday 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 use of other forms 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).

Take note: The publisher just isn’t accountable for the information or functionality of any information that is supporting by the writers. Any questions (apart from missing content) must be directed to your author that is corresponding this article.


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