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| Autori principali: | , |
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| Natura: | Preprint |
| Pubblicazione: |
2025
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| Soggetti: | |
| Accesso online: | https://arxiv.org/abs/2509.15247 |
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| _version_ | 1866908744523186176 |
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| author | Zhang, Tim Quinn, Amity |
| author_facet | Zhang, Tim Quinn, Amity |
| contents | This study examines how interest rate caps affect the demand for payday loans, using aggregate data from British Columbia (2012--2019) during which the province's maximum fee was reduced from $23 to $17 and then to \$15 per $100 borrowed. Estimating a linear demand function via OLS, we find that lowering interest rate caps significantly increases loan demand. We estimate that the $8 decrease, from $23 to $15 per $100, raised annual consumer surplus by roughly $28.6 million (2012 CAD). A further reduction to $14, starting in January 2025, would add another $3.9 million per year. These results suggest that stricter interest rate caps can yield substantial consumer welfare gains. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2509_15247 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Demand and consumer surplus in the payday-loan market: Evidence from British Columbia Zhang, Tim Quinn, Amity General Economics Economics This study examines how interest rate caps affect the demand for payday loans, using aggregate data from British Columbia (2012--2019) during which the province's maximum fee was reduced from $23 to $17 and then to \$15 per $100 borrowed. Estimating a linear demand function via OLS, we find that lowering interest rate caps significantly increases loan demand. We estimate that the $8 decrease, from $23 to $15 per $100, raised annual consumer surplus by roughly $28.6 million (2012 CAD). A further reduction to $14, starting in January 2025, would add another $3.9 million per year. These results suggest that stricter interest rate caps can yield substantial consumer welfare gains. |
| title | Demand and consumer surplus in the payday-loan market: Evidence from British Columbia |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2509.15247 |