Program Source Code for: Time to Repay or Time to Delay? The Effect of Having More Time Before a Payday Loan is Due

Principal Investigator(s): View help for Principal Investigator(s) Susan Carter, United States Military Academy West Point; Kuan Liu, Sam M. Walton College of Business University of Arkansas; Paige Skiba, Vanderbilt University Law School; Justin Sydnor, University of Wisconsin-Madison

Version: View help for Version V1

Name	File Type	Size	Last Modified
code			06/16/2021 02:47:PM
model_codes			08/30/2021 09:15:AM
README.pdf	application/pdf	194.7 KB	08/30/2021 05:25:AM

Project Citation:

Carter, Susan, Liu, Kuan, Skiba, Paige, and Sydnor, Justin. Program Source Code for: Time to Repay or Time to Delay? The Effect of Having More Time Before a Payday Loan is Due. Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-09-21. https://doi.org/10.3886/E142721V1

Project Description

Summary: We examine the effect of state laws on minimum payday loan durations that give some borrowers an additional pay cycle to repay their initial loan with no other changes to contract terms. Neoclassical models predict this "grace period" would reduce borrowers' need for costly loan rollovers. However, in reality, borrowers' repayment behavior with grace periods is very similar to borrowers with shorter loans, merely pushed out a few weeks. Potential explanations include heuristic repayment decisions and naive present focus. A calibrated model suggests that present-focused borrowers get less than half the benefit from a grace period that time-consistent borrowers would.

This is code to replicate the empirical analysis in the paper.

Scope of Project

Subject Terms: payday loans; present focus; loan duration; consumer finance

JEL Classification:
      D11 Consumer Economics: Theory
      D12 Consumer Economics: Empirical Analysis
      G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth

Geographic Coverage: Texas and Missouri

Time Period(s): 11/1/2001 – 8/31/2004

Collection Date(s): 8/1/2004 – 8/15/2004

Data Type(s): program source code

Methodology

Data Source: Anonymous Firm (2004). Payday loan administrative records. Unpublished data. Accessed June 2, 2021.

Unit(s) of Observation: Unit of observation is a single payday loan

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Published Versions

V1 [2022-09-21]

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