A Business Analysis of the Payday Loan Industry
In this chapter, we focus on how the industry functions in Canada: industrial organization, revenues, costs, profitability, and the effects of regulation up to this date. We focus primarily on the storefront operations of the larger payday lending chains and internet payday lending. We present a financial analysis that shows the maximum fee allowed should be 15% of the principal of a loan, assuming that payday lending is allowed to continue in Canada. We consider as well the economics of both the installment loan—as a close alternative to the payday loan—and setting a limit on the loan size.
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