II. THE DIFFERENCE A DAY MAKES: MEASURING THE IMPACT OF
II.6 Robustness
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While all of the aforementioned regressions use a linear regression estimation, we run all of our results for the outcome of success using a probit estimation, rather than OLS estimations, and find the results unchanged.
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Table II-6: Probability Repay for States with Minimum Loan Lengths Greater than Seven
(1) (2) (3) (4)
Day of Month (minus 9) -0.0020 -0.0093 -0.0022 0.063
(0.0111) (0.0107) (0.1498) (0.1026)
Less than 7 days until Paid 0.013 0.032 -2.67*** -2.48***
(= 9th of Month or Later) (0.0641) (0.0618) (0.6859) (0.4535)
Day of Month (minus 9) 0.00050 0.0073 -0.036 -0.075
X Less than 7 Days until Paid (0.0114) (0.0110) (0.1523) (0.1041)
Loan Amount ($100) -0.090*** 0.17*
(0.0103) (0.0872)
Home Ownership 0.066* -0.038
(0.0355) (0.3289)
Credit Score (Per 100) 0.038** -1.02***
(0.0151) (0.1433)
Age 0.0020* 0.014
(0.0012) (0.0109)
Female -0.049 0.13
(0.0437) (0.3503)
Interest Rate 0.0058*** 0.57***
(0.0017) (0.0141)
Checking Balance ($100) 0.0036 0.020
(0.0028) (0.0267)
Months at Residence -0.00022 -0.0012
(0.0001) (0.0014)
Net Pay ($1000) 0.0054*** 0.015
(0.0015) (0.0131)
Black 0.0051 -0.21
(0.0426) (0.3572)
Hispanic 0.23*** -1.93***
(0.0688) (0.5467)
Race, Other -0.24** -3.57***
(0.1205) (1.1953)
Month X Year Dummies Included X
State Dummies Included X
Dummy for Day of Week Taken Out X
Constant 0.51 24.26
(0.055) (0.601)
Number of Observations 2,304 2,257 2,304 2,257
Adjusted R-squared -0.0009 0.0816 0.0430 0.5622
Loan Length Success
States with Minimum Loan Lengths greater than 7
NOTES: Table II-6 presents the results from an OLS Regression on the likelihood of repaying a payday loan. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Dummies for missing home ownership, months in residence, age, checking account balance, net pay, and credit score variables included in columns 5 through 8. The omitted category for race is white. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
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We follow McCrary (2008) and test for distortions in density on either side of the cutoff by running our regression discontinuity with the outcome variable being the fraction of people in the sample (separately for each pay frequency). The results of the test are found in Table II-7. We did find a statistically significant change in the number of people taking out loans; however, this affect is in the range of -1.88 to 0.47 percentage point changes.
Table II-7: Percentage of Observations
We then verify that controls are not changing around the cut-off. If individuals with higher credit scores are arriving 7 days before they are paid, then it might bias the results against finding any effect of longer loan lengths. These results are reported in Tables II-8 through II-12 for each pay period. Credit scores are significantly lower for borrowers arriving 6 days before the pay date, but the magnitudes of these effects are small. Semi-monthly borrowers arriving 6 days before their next paycheck have an increase in their checking account balance of $38. Monthly borrowers are 12 percentage
All Bi-Weekly Bi-Weekly Thursday Bi-Weekly Friday Monthly Semi-monthly
Days until Paid (minus 6) -0.13*** 0.11*** -0.34*** -0.036*** 0.14***
(0.0018) (0.0002) (0.0000) (0.0018) (0.0042)
Less than 7 Days Until Paid -0.65*** 0.47*** -1.88*** -2.75*** -1.52***
(0.0213) (0.0056) (0.0029) (0.0310) (0.0217)
Days until Paid (minus 6) 1.22*** 1.14*** 1.34*** 0.14*** -0.57***
X Less than 7 Days Until Paid (0.0046) (0.0029) (0.0016) (0.0058) (0.0067)
Month x Year Dummies X X X X X
State Dummies X X X X X
N 91833 12878 63599 5162 14641
adj. R-sq 0.6703 0.9894 0.9941 0.5751 0.7226
NOTES: Table II-7 presents the results from an OLS Regression on the percentage of observations each day. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
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points less likely to be female. Bi-weekly borrowers paid on Friday are younger, and bi- weekly borrowers paid on Thursday are taking out larger loans. Bi-weekly borrowers in general, however, are taking out smaller loans and have a lower net pay.
Table II-8: Controls for Bi-Weekly Borrowers
Amount (in $100) Homeownership Credit Score (in 100 points) Age Female
Days until Paid (minus 6) 0.026*** -0.0019*** -1.4e-13*** -0.041** 0.0032***
(0.0025) (0.0007) (0.0000) (0.0203) (0.0009)
Less than 7 Days Until Paid -0.069*** -0.0093* -4.4e-13*** -0.25 0.0020
(0.0205) (0.0055) (0.0000) (0.1610) (0.0071)
Days until Paid (minus 6) -0.060*** 0.00014 2.1e-13*** 0.044 -0.0082***
X Less than 7 Days Until Paid (0.0056) (0.0015) (0.0000) (0.0432) (0.0019)
Month x Year Dummies X X X X X
State Dummies X X X X X
N 91833 91833 91833 91833 91833
adj. R-sq 0.0485 0.1289 1 0.0058 0.0094
Interest Rate Checking Account Balance Months in Residence Net Pay ($1,000)
Days until Paid (minus 6) -0.00070 -0.038*** -0.19 -0.26***
(0.0006) (0.0079) (0.1578) (0.0180)
Less than 7 Days Until Paid -0.0083* -0.038 -1.03 -0.35**
(0.0049) (0.0628) (1.3802) (0.1444)
Days until Paid (minus 6) -0.0010 0.063*** 0.39 0.46***
X Less than 7 Days Until Paid (0.0014) (0.0169) (0.3604) (0.0385)
Month x Year Dummies X X X X
State Dummies X X X X
N 91833 91833 91833 90119
adj. R-sq 0.81 0.0041 0.0092 0.0196
NOTES: Table II-8 presents the results from an OLS Regression on the control variables. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
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Table II-9: Controls for Bi-Weekly Borrowers Paid on Thursday
Table II-10: Controls for Bi-Weekly Borrowers Paid on Friday
Amount (in $100) Homeownership Credit Score (in 100 points) Age Female
Days until Paid (minus 6) 0.017** -0.0031 -2.2e-14*** -0.017 0.0050
(0.0085) (0.0023) (0.0000) (0.0707) (0.0030)
Less than 7 Days Until Paid -0.13* -0.013 -2.5e-14 0.48 0.032
(0.0735) (0.0196) (0.0000) (0.6028) (0.0260)
Days until Paid (minus 6) -0.063*** -0.0038 9.5e-14 0.24* -0.0040
X Less than 7 Days Until Paid (0.0158) (0.0041) (0.0000) (0.1230) (0.0054)
Month x Year Dummies X X X X X
State Dummies X X X X X
N 12878 12878 12878 12878 12878
adj. R-sq 0.0453 0.1298 1 0.0044 0.01
Interest Rate Checking Account Balance Months in Residence Net Pay ($1,000)
Days until Paid (minus 6) 0.0011 -0.037 0.83 -0.28***
(0.0023) (0.0250) (0.5248) (0.0596)
Less than 7 Days Until Paid 0.024 0.18 4.87 -0.47
(0.0200) (0.2187) (4.8073) (0.5211)
Days until Paid (minus 6) 0.0023 0.17*** 0.46 0.41***
X Less than 7 Days Until Paid (0.0042) (0.0470) (1.0594) (0.1134)
Month x Year Dummies X X X X
State Dummies X X X X
N 12878 12878 12878 12608
adj. R-sq 0.8059 0.0043 0.0097 0.0194
NOTES: Table II-9 presents the results from an OLS Regression on the control variables. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
Amount (in $100) Homeownership Credit Score (in 100 points) Age Female
Days until Paid (minus 6) 0.036*** -0.0023** 8.9e-16 -0.084*** 0.0021*
(0.0036) (0.0010) (0.0000) (0.0283) (0.0013)
Less than 7 Days Until Paid -0.022 -0.012 -2.5e-12*** -0.79*** -0.013
(0.0331) (0.0088) (0.0000) (0.2562) (0.0116)
Days until Paid (minus 6) -0.059*** 0.00030 -2.1e-12*** -0.031 -0.0096***
X Less than 7 Days Until Paid (0.0074) (0.0019) (0.0000) (0.0567) (0.0025)
Month x Year Dummies X X X X X
State Dummies X X X X X
N 63599 63599 63599 63599 63599
adj. R-sq 0.0388 0.1315 1 0.0076 0.0096
Interest Rate Checking Account Balance Months in Residence Net Pay ($1,000)
Days until Paid (minus 6) -0.0015* -0.037*** -0.35 -0.27***
(0.0008) (0.0117) (0.2189) (0.0252)
Less than 7 Days Until Paid -0.014* -0.078 -2.83 -0.16
(0.0077) (0.1046) (2.0095) (0.2291)
Days until Paid (minus 6) -0.00018 0.046** 0.054 0.56***
X Less than 7 Days Until Paid (0.0018) (0.0229) (0.4469) (0.0506)
Month x Year Dummies X X X X
State Dummies X X X X
N 63599 63599 63599 62537
adj. R-sq 0.7748 0.0042 0.0102 0.0208
NOTES: Table II-10 presents the results from an OLS Regression on the control variables. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
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Table II-11: Controls for Monthly Borrowers
Table II-12: Controls for Semi-Monthly Borrowers
Amount (in $100) Homeownership Credit Score (in 100 points) Age Female
Days until Paid (minus 6) 0.011*** 0.00030 -1.3e-15*** 0.060 0.0015
(0.0023) (0.0008) (0.0000) (0.0473) (0.0011)
Less than 7 Days Until Paid -0.077 -0.050* 1.2e-13*** 1.06 -0.12**
(0.1031) (0.0269) (0.0000) (2.2350) (0.0491)
Days until Paid (minus 6) -0.10** -0.010 4.1e-14*** 1.23 -0.049***
X Less than 7 Days Until Paid (0.0433) (0.0094) (0.0000) (0.8732) (0.0176)
Month x Year Dummies X X X X X
State Dummies X X X X X
N 5162 5162 5162 5162 5162
adj. R-sq 0.0146 0.207 1 0.0029 0.0078
Interest Rate Checking Account Balance Months in Residence Net Pay ($1,000)
Days until Paid (minus 6) -0.0011 -0.0016 0.10 -0.027*
(0.0010) (0.0075) (0.2934) (0.0157)
Less than 7 Days Until Paid -0.018 -0.042 -7.25 -1.09
(0.0396) (0.3576) (11.7945) (0.7105)
Days until Paid (minus 6) -0.0027 -0.13 -2.29 -0.21
X Less than 7 Days Until Paid (0.0117) (0.1239) (4.1861) (0.2537)
Month x Year Dummies X X X X
State Dummies X X X X
N 5162 5162 5162 5064
adj. R-sq 0.6644 0.0041 0.009 0.0086
NOTES: Table II-11 presents the results from an OLS Regression on the control variables. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
Amount (in $100) Homeownership Credit Score (in 100 points) Age Female
Day of Month (minus 6) -0.049*** 0.0014 3.5e-14* 0.023 -0.00028
(0.0072) (0.0015) (0.0000) (0.0504) (0.0023)
Greater than 6 Days Until Paid 0.014 0.0044 -1.9e-13* 0.49 0.0037
(0.0499) (0.0104) (0.0000) (0.3453) (0.0151)
Day of Month (minus 6) 0.093*** 0.0017 -3.9e-14 -0.059 0.0049
X Greater than 6 Days Until Paid (0.0126) (0.0027) (0.0000) (0.0883) (0.0038)
Month x Year Dummies X X X X X
State Dummies X X X X X
N 14641 14641 14641 14641 14641
adj. R-sq 0.0436 0.1494 1 0.0053 0.0183
Interest Rate Checking Account Balance Months in Residence Net Pay ($1,000)
Day of Month (minus 6) -0.0011 -0.028 0.71* 0.062
(0.0014) (0.0230) (0.3811) (0.0520)
Greater than 6 Days Until Paid 0.0074 0.38** 1.95 0.42
(0.0105) (0.1600) (2.6111) (0.3633)
Day of Month (minus 6) 0.0017 -0.066* -0.74 -0.28***
X Greater than 6 Days Until Paid (0.0026) (0.0396) (0.6779) (0.0906)
Month x Year Dummies X X X X
State Dummies X X X X
N 14641 14641 14641 14355
adj. R-sq 0.6377 0.0047 0.008 0.0157
NOTES: Table II-12 presents the results from an OLS Regression on the control variables. Less than 7 Days Pay Day is an indicator variable equal to one if there were less than 7 days until the borrowers next pay date. 6 days are subtracted from the Day of Month variable for ease of interpretation. Standard errors are in parentheses underneath each coefficient. The sample of payday loan borrowers include first time applicants and borrowers who had not taken out a loan for 90 days. States where the minimum loan length is seven and borrowers are allowed to roll over their loan are represented in the sample. Standard errors are clustered at the individual level. *** p < 0.01, ** p < 0.05, * p < 0.1
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