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The Increase in Payday Loans and Damaged Credit after the Great Recession


The proportion of US households that used a high-cost credit product, payday loans, almost doubled between 2007 and 2013. In this study, we estimated the effect of credit constraints on the likelihood of using payday loans. Based on a logistic regression of data from the 2007–2013 Survey of Consumer Finances (SCF), we found that households with credit constraints were more likely to use payday loans than were those that did not experience such constraints, and that the effect was greater after the Great Recession. Over the survey years, having an emergency expense was the most important reason given for using a payday loan, but the rate at which other reasons were given varied over time. Paying bills/loans and having no other credit options were both reasons given more frequently following the Great Recession than in 2007.

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Fig. 2


  1. Sample sizes by survey year were as follows: 2007 (N = 4,418), 2010 (N = 6,482), and 2013 (N = 6,015).

  2. The authors conducted a Chi-squared test for three pair-wise comparisons across the survey years, and all three were significant (p < .0001).

  3. The authors conducted a chi-squared test for three pair-wise comparisons across the survey years, two of which (2007 vs. 2010, 2007 vs. 2013) were significant (p < .0001).


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Correspondence to Kyoung Tae Kim.

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Lee, J., Kim, K.T. The Increase in Payday Loans and Damaged Credit after the Great Recession. J Fam Econ Iss 39, 360–369 (2018).

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  • Payday loans
  • Credit constraints
  • Great recession
  • Survey of consumer finances

JEL Classification

  • D12
  • D14