How did the Great Recession Affect Payday Loans

In this article, we aim to answer two important questions: first, whether payday borrowing rose during the Great Recession; and second, whether the use of payday loans expanded beyond low-income borrowers to include more middle-income borrowers. In 2008, Senator Elizabeth Warren, at the time a law professor at Harvard University, argued that “as the economy has worsened … payday loans have increasingly become crutches for those higher up the economic scale” (Christensen, 2008). Many articles in the popular press in recent years have voiced the same concern (for example, White, 2013; Popper and Thompson, 2011;and Marshall, 2015).

Sumit Agarwal & Tal Gross & Bhashkar Mazumder, 2016. "How Did the Great Recession Affect Payday Loans?," Economic Perspectives, Federal Reserve Bank of Chicago, issue 2, pages 1-12.