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1 Introduction

1 Introduction

Over 2 decades since its emergence, payday financing continues to be a divisive subject for economists and policymakers.

No conscensus happens to be reached on whether use of these high-cost, short-term balloon loans makes consumers best off or even even even worse. Advocates point out cases where payday advances look like a person’s option that is best. A payday loan may be preferable to an electricity shutoff and eventual reconnect fee for instance, if unexpected medical expenses leave a family short on money to pay utilities. Alternate resources of funds can be unavailable into the full situation of emergency (for example, charge cards could be maxed down) or higher costly than pay day loans (as are overdraft charges at numerous banking institutions). Research such as for instance Morgan and Strain (2008), Elliehausen (2009), Fusaro and Cirillo (2011), and Morse (2011) has supported the idea that usage of payday lending is welfare-enhancing.