Economic Research and Data

Conferences and Workshops

For Further Conference Information

  • Donna Brooks
  • t. 216-579-2309

Payday and Predatory Lending Seminar


October 26, 2007


This research seminar will feature two papers on payday lending and two papers on predatory lending. Participation is by invitation only.



10:00 am – 10:30 am  

Registration and beverages


10:30 am – 12:00 pm  

Session I: Payday Lending

Presentation and Discussion


Measuring the Individual-Level Effects of Access to Credit: Evidence from Payday Loans
Presenter: Paige Skiba, Vanderbilt University

The researchers determined the impact of payday loan borrowing on personal bankruptcy filing through a research design that exploits the credit-scoring process used to approve or deny loan applications, allowing the researchers to study the causal impact of access to payday loans. Using personal identifying information, the researchers matched public records on bankruptcy to a four-year panel dataset of 145,000 loan applicants from a large payday and pawn lender. The authors found that payday loans increased Chapter 13 bankruptcy filing rates.

Payday Lenders: Heroes or Villains?
Presenter: Adair Morse, University of Chicago

The author studied the effect that the availability of exceptionally high-interest consumer loans (payday loans) has on individual welfare by using natural disasters as an exogenous shock to communities’ financial condition. The author’s research method led her to find that communities with payday lenders show greater resiliency to natural disasters. For three of the four welfare measures considered—foreclosures, births, and alcohol and drug treatment admissions—the estimates suggest that payday lending enhances the welfare of communities. The author’s paper includes discussion of whether this effect is limited to individuals facing personal disasters or applies in general.

Discussant: Jane Dokko, Federal Reserve Board of Governors


12:00 pm – 1:30 pm  

Optional tour of the Cleveland Fed’s Learning Center and Money Museum


1:30 pm – 3:00 pm  

Session II: Predatory Lending

Presentation and Discussion


Predatory Lending in a Rational World
Presenter: Philip Bond, University of Pennsylvania Wharton School of Business

“Predatory lending in a Rational World,” with David Musto and Bilge Yilmaz, seeks to give a precise definition of predatory lending and to provide predictions on when and where it is most likely to occur. The paper includes a discussion of the possible effects of various legislative interventions in credit markets.

State and Local Anti-Predatory Lending Laws: The Effect of Legal Enforcement Mechanisms
Presenter: Anthony Pennington-Cross, Marquette University

Subprime mortgage lending has grown rapidly in recent years and with it, so have concerns about predatory lending. In response to evidence of predatory lending, most states have enacted new laws or expanded existing laws to address abuses in the subprime home loan market. The effect of these statutes is a matter of debate. This paper seeks to improve the understanding of this increasingly important issue and pays particular attention to the role that legal enforcement mechanisms play in this context. The results of the analysis are consistent with the view that anti-predatory lending laws influence subprime lending markets and that disaggregating the details of the overall legal framework into its component parts is essential for understanding subprime market dynamics.

Discussant: Don Morgan, Federal Reserve Bank of New York


3:00 pm