Prohibitions, Price Caps, and Disclosures: A Look at State Policies and Alternative Financial Product Use

Prohibitions, Price Caps, and Disclosures: A Look at State Policies and Alternative Financial Product Use

Abstract

This study uses nationally representative data from the 2009 National Financial Capability State-by-State Survey to examine the relationship between state-level alternative financial service (AFS) policies (prohibitions, price caps, disclosures) and consumer use of five AFS products: payday loans, auto title loans, pawn broker loans, refund anticipation loans, and rent-to-own transactions. The results suggest that more stringent price caps and prohibitions are associated with lower product use and do not support the hypothesis that prohibitions and price caps on one AFS product lead consumers to use other AFS products.

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