The pooled regressions found that minimum loan terms affect loan size, while the law-change results support that

The pooled regressions found that minimum loan terms affect loan size, while the law-change results support that

Only 1 state changed its legislation regarding minimum or optimum loan term: Virginia raised its minimal loan term from 1 week to 2 times the length of the debtor’s pay period. Assuming a pay that is standard of fourteen days, this raises the effective restriction by about 21 days. The column that is third of 5 estimates that loan size in Virginia increased almost 20 times an average of as an effect, suggesting that the alteration had been binding. OH and WA both display more changes that are modest normal loan term, though neither directly changed their loan term regulations and Ohio’s modification had not been statistically significant.

All six states saw changes that are statistically significant their prices of loan delinquency.

The change that is largest took place Virginia, where delinquency rose almost 7 portion points more than a base price of approximately 4%. The evidence that is law-change a connection between price caps and delinquency, in keeping with the pooled regressions. Cost caps and delinquency alike dropped in Ohio and Rhode Island, while cost caps and delinquency rose in Tennessee and Virginia. (more…)