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An Examination Of Short-Term Borrowing In The United States

Author

Listed:
  • Swarn Chatterjee
  • Joseph Goetz
  • Lance Palmer

Abstract

This paper uses data from the Survey of Consumer Finances to determine the characteristics of people who obtained high-interest loans to meet their short-term financing needs. Results indicate that individuals who were denied credit in the past were one and a half times more likely to borrow from alternative lenders (e.g., payday loan lenders and loan financing companies) than were individuals who had not previously been denied credit. Educational attainment, income, and wealth were negatively associated with borrowing from alternative institutions. The likelihood that, given the current economic downturn, more consumers may have to migrate from conventional credit markets such as banks or credit unions to alternative credit markets for their borrowing needs leads to a discussion of the necessity for more information and education to vulnerable populations.

Suggested Citation

  • Swarn Chatterjee & Joseph Goetz & Lance Palmer, 2009. "An Examination Of Short-Term Borrowing In The United States," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 3(2), pages 1-8.
    • Handle: RePEc:ibf:gjbres:v:3:y:2009:i:2:p:1-8
    as

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    File URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v3n2-2009/GJBR-V3N2-2009-1.pdf
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    References listed on IDEAS

    as
    1. Jonathan Crook & Stefan Hochguertel, 2007. "US and European Household Debt and Credit Constraints," Tinbergen Institute Discussion Papers 07-087/3, Tinbergen Institute.
    2. Kayla Allen & Victoria Kinchen, 2009. "Financial Management Practices Of College Students," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 3(1), pages 105-116.
    3. Kristopher Gerardi & Andreas Lehnert & Shane M. Sherlund & Paul Willen, 2008. "Making Sense of the Subprime Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 69-159.
    4. Donald P. Morgan & Michael R. Strain, 2007. "Payday holiday: how households fare after payday credit bans," Staff Reports 309, Federal Reserve Bank of New York.
    5. Arthur B. Kennickell & R. Louise Woodburn, 1999. "CONSISTENT WEIGHT DESIGN FOR THE 1989, 1992 AND 1995 SCFs, AND THE DISTRIBUTION OF WEALTH," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(2), pages 193-215, June.
    6. Edward C. Lawrence & Gregory Elliehausen, 2008. "A Comparative Analysis Of Payday Loan Customers," Contemporary Economic Policy, Western Economic Association International, vol. 26(2), pages 299-316, April.
    7. Michael A. Stegman, 2007. "Payday Lending," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 169-190, Winter.
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    Cited by:

    1. Reboul, E. & Guérin, I. & Nordman, C.J., 2021. "The gender of debt and credit: Insights from rural Tamil Nadu," World Development, Elsevier, vol. 142(C).

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    More about this item

    Keywords

    Household Finance; Debt Management; Alternative Lending;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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