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Do Payday Lenders Target Minorities

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Abstract

Payday lenders make small, short-term loans to millions of households across the country. Though popular with users, the credit is controversial in part because payday lenders are accused of targeting their seemingly high-priced credit at minority households. In this post, we look at whether black and Hispanic households are in fact more likely to use payday credit. We find that, unconditionally, they are, but once we control for financial characteristics?such as past delinquency, debt-to-income ratios, and credit availability, blacks and Hispanics are not significantly more likely than whites to use payday credit.

Suggested Citation

  • Donald P. Morgan & Kevin J. Pan, 2012. "Do Payday Lenders Target Minorities," Liberty Street Economics 20120208, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:86787
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    Cited by:

    1. Marvin Smith & John Wackes & Tony Smith, 2013. "A note on alternative financial service providers and the spatial void hypothesis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 575-591, October.
    2. Bhutta, Neil, 2014. "Payday loans and consumer financial health," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 230-242.

    More about this item

    Keywords

    minorities.; Payday lending; targeting;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G1 - Financial Economics - - General Financial Markets

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