Throughout my 23 years of formal education, I have been blessed to receive guidance from many different teachers, and I wish I had the space to acknowledge them all here. My experience at Vanderbilt has been no different, and since I first arrived on campus, I have always been amazed at how generous the professors at Vanderbilt are in donating their time to help each student improve.
Introduction
The new appendix asks questions about the use of payday loans and pawn shops and offers the first. To my knowledge, this article is the first to examine the effect of extension laws on the use of pawn shops along with payday loans.
Background on Payday Loans and Pawnshops
8 When payday loans are eliminated, bounced checks and Chapter 7 bankruptcy filings increase (Morgan and Strain, 2008; Zinman, 2010). Their results do not show a large effect of the interest rate cap on the use of payday loans.
Data
In states where payday lending is legal, payday lenders are more likely to say convenience and convenience are reasons for using pawn shops. NOTES: Table I-1 shows the percentage of people in each group using personal loans, pawn loans, personal loans and pawn loans combined, per group.
Identifying the Effect of Allowing Rollovers Using Variation in State
Results
Non-citizen An indicator equal to 1 if an individual reports not being a citizen, 0 otherwise. One Child An indicator equal to 1 if an individual has one child, and zero otherwise, O otherwise.
Cross-Border Effects
Methodology
20 "Due to the change in the nature of the pledged items and the greater availability of On the expiry date of the loan, the borrower will have six options: 1) repay the loan;. State payday loan laws vary as to the interest rate and number of repayments allowed (if any).
This literature has focused on repayment frequency, which serves a role similar to that of loan duration in the payday loan market. Within states, lenders also do not adjust the interest rate based on the length of the loan. Manipulation of the operating variable in the regression intercept design: a density test,” Journal of Econometrics, Vol.
In both cases, home ownership status is significantly below the average in the rest of the country.
Results
Discussion
Entry on the 9th causes an increase in average loan length of 10 days. The Law and Geography of Payday Loans in Military Cities," The Ohio State Law Journal, Vol. Using the panel nature of the PSID, I confirm that bankruptcy filings in states with low homestead exemptions have similar patterns before and after filing for bankruptcy, regardless of whether they filed in the 1980s or 1990s.
In fact, a number of famous (and now wealthy) individuals have filed for bankruptcy in the past. Individuals who filed in the 1990s have an increased likelihood of owning a home after filing for bankruptcy. Overall, these results show that individuals who file for bankruptcy are significantly less likely to own a home than the average individual in the sample.
NOTES: Table III-9 presents the results of probit regressions on the probability of using food stamps in the past year.
Conclusion
APPENDIX
Default
The probability of repayment varies according to the type of collateral, the gender of the borrower and the value of the item. Instruments, weapons, and jewelry have the highest probability of repayment and the lowest probability of default. Vehicles, household goods and miscellaneous items have the highest probability of default and the lowest probability of repayment.
Sentimental Items
In addition, we calculate the probability of default on the loan amount, an indicator for each commodity category and month-year dummies.
Relationship with Payday Loans
The figure shows that the fans in the 1980s had a higher probability of owning a house in the 1980s. Individuals are seven and three percentage points less likely to own a business if they live in a state with low or high homestead exemptions and have filed for bankruptcy in the past year. Of the sample, only about six percent of bankruptcy files in the sample file for a second bankruptcy.
THE DIFFERENCE A DAY MAKES: MEASURING THE IMPACT OF
Introduction
In this article, we study the effect of increasing the time a borrower has to repay a personal loan. Payday loans with more time to pay back should be especially useful for those who use payday loans to get over a very temporary shock. Whether or not having more time to repay a loan affects repayment behavior is ultimately an empirical question.
Theoretical Framework
That is, in the "long run" case, the borrower has the ability to smooth out the repayment shock over two periods at no cost. In the case of "short duration" the only way to spread over two periods (instead of just one period) is to incur the interest cost. The extra period to repay the loan in the "long-term" case has less of an impact on the.
Data
Second, for continuity, we limit our analysis to states where extensions are allowed and the minimum loan length is seven days (Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Missouri, North Carolina, Ohio, Oklahoma, Tennessee, Texas and Utah).26 Our final sample consists of 184,177 loans. The other half are a mix of borrowers who pay semi-monthly (16 percent), monthly (17 percent) or weekly (12 percent). Thirty-eight percent of borrowers are homeowners, although homeownership is not recorded in the data for a significant portion of the sample.
Empirical Strategy
We also have a sample of borrowers who are paid monthly through Social Security checks paid on the 3rd of the month. The days until the next salary were counted as the length of the loan, if the loan was taken out after the 3rd of the previous month. For example, if a borrower took out a loan on June 5th and the loan due date was July 3rd, the days until payment would be 28.
Results
NOTES: Table II-3 presents the results of an OLS regression on the probability of paying off a payday loan. NOTES: Table II-4 presents the results of an OLS regression on the probability of paying off a payday loan. NOTES: Table II-5 presents the results of an OLS regression on the probability of paying off a payday loan.
Robustness
NOTES: Table II-6 shows the results from an OLS regression on the probability of repaying a payday loan. If people with higher credit scores arrive 7 days before they are paid, this may bias the results against finding any effect of longer loan lengths. NOTES: Table II-7 shows the results from an OLS regression on the percentage of observations each day.
Conclusion
Investors in states with low homestead exemptions are less likely to own a home even 10 years after filing. Individuals in states with low homestead exemptions have a positive probability (although not statistically significant) of owning a business years after filing. Fewer people, but individuals with more assets, file for bankruptcy in states with high homestead exemptions.
HOMEOWNERSHIP POST BANKRUPTCY
Introduction
These exemption laws affect the supply and demand for credit in the country, as well as who files for bankruptcy. Using cross-sectional data from the 1996 PSID, I find evidence that (after controlling for demographics) individuals filing in low-exempt states are 40 percentage points less likely to have a homestead within a year of filing to own a home compared to the average individual in the state, and while this rate decreases the longer time passes since an individual filed, individuals are still 26 percentage points less likely to own a home ten years after bankruptcy. The difference in the likelihood of home ownership is not statistically different between people who filed Chapter 7 and Chapter 13 two to ten years before and more than after.
Exemptions
One argument for higher homestead exemption laws is based on the idea that it can increase the desirability of home ownership, which has positive externalities. But because exemption laws affect lenders' access to loans, it affects who finds themselves in greater financial trouble. 34 While it was generally agreed that exemption laws lead to lower filing rates, Dawsey and Ausubel (2004) find that people in countries with high garnishment laws are more likely to file bankruptcy, while in countries with creditors are not allowed to garnish wages, people are more likely to not file for bankruptcy and instead go through what is known as "informal bankruptcy."
What Happens Post Bankruptcy? (Previous Literature)
These results suggest that high homestead exemptions help wealthier individuals access credit and give them a greater incentive to apply. Zagorsky and Lupica's (2008) analysis of post-bankruptcy investors is most closely related to mine. They find that it takes 12 to 24 years for filers to catch up to non-filers in terms of total income, net worth and home ownership.
Panel Study of Income Dynamics
I use both the panel aspect of the data and a cross-section from 1996, when the question was asked. In 1996, they also asked a number of other questions about the family's financial health. Additionally, due to the low number of comments for states with high exemptions, I cannot comment.
Empirical Strategy
Bankruptcy filers who live in states with low exemption laws are 21 to 40 percentage points less likely to own a home. Borrowers in states with low homestead exemptions are less likely to own a home the more years pass compared to bankruptcy filers in states with high homestead exemptions. These results suggest that relative to states with high homestead exemptions, bankruptcy filers in states with low homestead exemptions are no more likely to purchase a home years after bankruptcy.
Results
- Robustness
Chapter 7 versus Chapter 13
Bankruptcy filers who filed a Chapter 13 in the past year have a higher probability of owning a home by 2.6 percentage points, but this result is not statistically significant. There is an increase in the likelihood of owning a home for Chapter 7 filers as several years since bankruptcy pass; meanwhile, Chapter 13 filings continue to decline over time. These results show that borrowers in states with low household exemptions do not catch up with non-filers, and Chapter 13 filers' household assets decline over time.
Conclusion
Consumer bankruptcy as part of the social safety net: fresh start or treadmill?” Santa Clara Law Review, Vol. Crime Patterns by Racial/Ethnic Status: A Selection Model." Proceedings of the Academy of Financial Services. Bankruptcy and the Market for Mortgage and Home Improvement Loans." Journal of Urban Economics, Vol.
