Styles in Treatment and Control States. The consequence of Cash Advance Bans on Cash Advance Utilize
The result of Cash Advance Bans on Cash Advance Utilize
Before presenting our primary outcomes, we gauge the comparability regarding the therapy and control states. State policy toward payday advances just isn’t determined arbitrarily; the choices of legislatures or courts to permit or ban loans that are payday rely on factors which can be correlated with all the behavior of borrowers into the state. As an example, growing loan that is anti-AFS in circumstances may simultaneously cause borrowers to cease making use of such loans and politicians to pass through legislation against them. 18
One good way to investigate this problem is by taking a look at preperiod styles within the two sets of states. It might suggest that the changes in policy are confounded by secular trends in AFS usage if we observe that demand for AFS borrowing in prior years increases or decreases in the treatment states relative to the control states. Although we can’t straight gauge the parallel-trends presumption upon which our difference-in-differences design relies, watching differences that are important the pretreatment styles might declare that the styles differed when you look at the therapy duration also.
Preferably, we might undertake this analysis with every of this result variables inside our analysis. This might be feasible with all the variables for conventional credit item usage, while the CCP data start in 2006, a couple of years prior to the state that is first modifications. Regrettably, there is certainly only 1 wave of CPS information before the continuing state policy modifications we think about here; ergo, we can not utilize those data to spot preperiod trends when you look at the AFS credit item factors.
