The consequence of Cash Advance Bans on Cash Advance Utilize
Before presenting our results that are main we measure the comparability for the treatment and control states. State policy toward pay day loans is not determined arbitrarily; the choices of legislatures or courts to permit or ban loans that are payday be determined by facets which are correlated utilizing the behavior of borrowers into the state. As an example, growing anti-AFS loan belief in a situation may simultaneously cause borrowers to get rid of utilizing such loans and politicians to pass legislation against them. 18
One method to investigate this problem is through taking a look at preperiod styles when you look at the two categories of states. When we discover that need for AFS borrowing in previous years increases or decreases within the therapy states in accordance with the control states, it may claim that the alterations in policy are confounded by secular styles in AFS use. Although we can’t straight gauge the parallel-trends presumption on 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 too.
Preferably, we’d undertake this analysis with every for the result variables inside our analysis. This will be feasible aided by the factors for old-fashioned credit item usage, since the CCP data start in 2006, a couple of years prior to the very first state policy modifications. Regrettably, there is certainly only 1 revolution of CPS information before the state policy changes we start thinking about right right here; thus, we can not utilize those information to spot preperiod trends within the AFS credit item factors.