The entire thesis text is included in the research.pdf file; the official abstract appears in the short.pdf file; a non-technical public abstract appears in the public.pdf file. Title from PDF of title page (University of Missouri--Columbia, viewed on March 24, 2010). Thesis advisor: Dr. Matthew Foulkes. Includes bibliographical references.

Census data show that about 60 million, mostly low-income and minority, American adults either do not have a bank account or have an account but also rely on non-bank financial products to make ends meet. These products, such as payday loans, often have high costs per dollar lent and have historically fallen into gaps in both state and federal regulation. Texas, home of the largest payday lending companies in the country and over 2,500 payday lenders, provides an instructive case study of how small-dollar loan regulation has developed over the years, how non-bank financial institutions navigate the law, and how some organizations with non-profit missions have sought to offer affordable loan alternatives. This paper places current lending regulation in historical context, surveys federal and Texas law related to small-dollar loans prior to and following the financial crisis in 2008, and provides highlights from a federal pilot program designed to encourage banks to offer affordable small-dollar loan products. It also examines the experience of a community development financial institution (CDFI) in Brownsville, Texas that launched a small-dollar loan program in 2012. The federal pilot and Brownsville cases provide insights regarding the viability of affordable small-dollar products, as well as the challenges facing non-profit-maximizing institutions such as CDFIs when trying to develop loan programs under the current regulatory regime. Ultimately this paper concludes that, while there may always be a market for high-cost non-bank financial services, a combination of federal efforts to promote affordable options at banks and efforts by community-oriented CDFIs can go a long way towards providing lower-cost alternatives for people who currently rely on high-cost, non-bank products. / text

The 2008 financial crisis raised concerns surrounding the validity of federal protection in the consumer financial market and brought increased scrutiny to short term consumer lending programs-including payday loans. In response to the political pressure, President Obama signed the 2010 Dodd-Frank Act into law. Under this Act the Consumer Financial Protection Bureau was created and in 2017 it implemented federal regulations against non-bank payday lenders for the first time. I will discuss the Consumer Financial Protection Bureau’s economic justification for the regulation of payday loans and the implications of new standards of abuse in consumer protection and financial regulation.

No description available.

As the lending practices of the alternative financial services (AFS) industry harm many consumers and consumers' access and use of traditional credit are restricted, the use of AFS is a growing concern. The financial education of consumers determines their financial behavior, which may be inadequate to make effective financial decisions regarding high-cost borrowings. The purpose of this quantitative study was to examine if and to what extent the sources of financial education is related to the use and frequency of use of AFSs among U.S. consumers. The theory of planned behavior and the transtheoretical model of change shaped the theoretical framework for this study. An explanatory correlational design was used to analyze archival data collected by the FINRA Investor Education Foundation for their 2015 National Financial Capability Study. Binary logistic and negative binomial regression analyses indicated that exposure to formal financial education did not contribute to reduced use and lower frequency of use of AFSs but, instead, contributed to the exact opposite. Only parental financial education was found to contribute to reduced use and lower frequency of use of AFSs. One-way ANOVA analyses indicated that all forms of financial education contributed to increased perceived financial knowledge. This study may lead to positive social change by informing policymakers about the necessary steps to remedy the problem of continuous AFS usage and serving as a foundation for future studies that should consider other factors beyond formal financial education that could influence the use and frequency of use of AFSs.

Darbo tikslas yra suprasti mažųjų (greitųjų) vartojimo kreditų institutą, jo vietą ir reikšmę Lietuvos skolinimosi rinkoje. Analizuojamas vartotojų poreikis skolintis bei atkreiptinas dėmesys į tai, kaip šio instituto draudimas paveiktų visuomenę ir kokias pasekmes draudimas turėtų įstatyminiu požiūriu. Uždaviniams pasiekti yra nadojami lyginamosios analizės, dokumentų analizės, analitins, aprašomasis metodai. Metodų pagalba buvo gautos žemiau pateikiamos išvados. Vadovaujantis LR Konstitucijos 46 str., valstybė reguliuoja ūkinę veiklą taip, kad ji tarnautų bendrai tautos gerovei. Pažymėtina, jog LR Konstitucinis Teismas yra pabrėžęs, jog materialinės vertybės bei jų poreikių tenkinimas paprastai atspindi tautos gerovę, tačiau apie bendrą tautos gerovę galima spręsti ir iš žmogaus individualių saviraiškos galimybių. Neatsižvelgiant į tai, nuo 2013-ųjų m. liepos 1 d. Lietuvos bankas sugriežtino vartojimo kreditų išdavimo tvarką (ketinama griežtinti labiau), tuo pačiu apsunkindamas mažųjų (greitųjų) vartojimo kreditų išdavimo procesą. Pažymėtina ir tai, jog Lietuva yra vientintelė valstybė Europos Sąjungoje, kurios skolinimosi koeficientas yra mažiausas, tačiau reglamentavimas – griežčiausias. Asmenys turi teisę į pilnavertį gyvenimą, apimant, bet neapsiribojant, asmenų teisę į buitinių reikmenų apsirūpinimą, teisę į būstą ir jo išlaikymą, prabangos prekes bei teisę į natūralų poreikį – nuolatinį gyvenimo sąlygų gerinimą. Šių vertybių ir teisių įgyvendinimui iš dalies padeda... [toliau žr. visą tekstą] / This study examines how consumers would be influenced, if payday loans be prohibited. To reach the goal, normative evaluative, descriptive explanatory, comparative analysis methods were applied. Below it is presented the results of the study. Changing needs of the country’s economy accordingly lead to the change of people’s need to adapt to natural changes in society. As these needs grow, some people (usually, more socially vulnerable persons) often experience shortage of additional income. Additional income is often necessary to meet the minimum needs of the individual: food, treatment or extra events, such as car repairs, etc. Usually, this group of people has no alternatives of borrowing, because fail to meet the applicable requirements for income. In such case, these persons obtain additional income through consumer payday loans. However, the society seeks to form the view that this type of credits is harmful to society, since it is considered to be a “costly” borrowing product that gives rise to a “vicious circle of borrowing”, when the consumer is forced to pay the cost of credit extension (which further increases the cost of the credit) due to shortage of income to repay full amount of the credit. For this reason, the state started regulating procedures for granting consumer payday loans (fast credits). The main reason why Lithuanian legislators adopted such strict regulation of the market is the inability of consumers to manage their finances. However, such... [to full text]

The three chapters of my dissertation study household finance, with a particular interest in financial institutions and poor households. Specifically, I study constraints households have that are unobservable to institutions yet impact their interaction and the effectiveness of government interventions that aim to ease or facilitate these exchanges. Chapter 1 studies the behavior of payday loan borrowers by using bank-transaction level data on household spending, income, and loan activity to document three novel stylized facts. They suggest that a payday borrower is poor, has volatile income, and uses payday loans to smooth baseline consumption needs after an adverse idiosyncratic income shock. Chapter 2 builds on these findings to motivate a short-term lending model. The equilibrium contract under realistic frictions matches the observed payday loan contract on multiple dimensions, specifically when borrowers have low expected income and high-income volatility. I then calibrate my model using my bank-transaction dataset and find welfare increases between 5% and 28.7% when rollover fees decrease and initial fees increase. Chapter 3 studies the efficiency of government healthcare subsidization schemes, with a specific interest in the underlying mechanisms that financially motivate hospitals to serve the uninsured. We study a Disproportionate Care Hospital (DSH) payment scheme that supports hospitals treating a disproportionately higher fraction of uninsured patients. We demonstrate that DSH payments lead to social welfare loss, especially in a system with large and small hospitals, compared to the second-best mechanism. We then use the setting of the Global Payment Program (GPP) program, which compliments DSH by providing primary care, to show that direct and assured payment for primary care improves social welfare. Overall, my dissertation seeks to understand the development of an equilibrium contract structure between financial institutions and the poor, examine methods of greater efficiency, and evaluate the impact of government interventions to alleviate tensions between these parties.

No description available.