Banks and Payday Lenders: Friends or Foes?

  • James R. Barth
  • Jitka HilliardEmail author
  • John S. JaheraJr.


This paper investigates the geographic distribution of payday lenders and banks that operate throughout the United States. State-level data are used to indicate differences in the regulatory environment across the states. Given the different constrains on interest rates and other aspects of the payday loan products, we empirically examine the relationship between the number of payday lender stores and various demographic and economic characteristics. Our results indicate that number of stores is positively related to the percentage of African American population, the percentage of population that is aged 15 and under and the poverty rate. The number of stores is also negatively related to income per capita and educational levels.


Payday lending Small loans Credit issues 


D18 G21 G23 



The authors are extremely grateful to Richard Cebula for inviting us to write and present this paper as well as helpful comments. Thanks are also due to Kang Lee for assistance with the ridge estimation application.


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Copyright information

© International Atlantic Economic Society 2015

Authors and Affiliations

  • James R. Barth
    • 1
    • 2
  • Jitka Hilliard
    • 1
    Email author
  • John S. JaheraJr.
    • 1
  1. 1.Auburn UniversityAuburnUSA
  2. 2.Milken InstituteSanta MonicaUSA

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