Economic Impact on Small Lenders of the Payday Lending Rules under Consideration by the CFPB

October 7, 2016 | Research & Surveys

Arthur Baines, Marsha Courchane, Steli Stoianovici (Charles River Associates)

ONE-PAGER: Economic Impact on Storefront Lenders of the Payday Lending Rules Proposed by the CFPB

FULL STUDY: Economic Impact on Small Lenders of the Payday Lending Rules under Consideration by the CFPB
 

Abstract:

This study includes an evaluation of the impact on the payday lending supply of credit, associated revenues and the profitability of larger storefront payday lenders. The Proposed Rules, by definition, result in a significant reduction in the supply of payday credit. The CFPB and others have estimated this reduction to be large, and our findings are similar. Using loan level data and income statements collected from a sample of larger storefront payday lenders, we estimate that the proposals are likely to impact the lenders negatively and significantly. The Proposed Rules will likely make the larger stores that offer payday loans unprofitable on average, resulting in significant losses for larger storefront payday lenders.