Pay Day Loans Do Not Cause Bankruptcy, Clemson University Study Discovers

Dr. Petru S. Stoianovici and Prof. Michael T. Maloney learned the partnership between payday bankruptcy and lending filings on the duration from 1990 to 2006. Making use of data that are state-level the legality of payday financing as well as on the amount of loan shops, the detectives found that neither the legality of payday financing nor a rise in how many loan stores resulted in greater prices of customer bankruptcies.

In accordance with Dr. Stoianovici, he and Prof. Maloney learned the consequences of payday-lending legislation as well as the true amounts of payday-loan stores in very early years on individual bankruptcy filing prices in subsequent years. Their research utilized two various analytical strategies, neither of which discovered any relationship between payday financing and bankruptcy prices. Among the strategies, called Granger causality screening, is created specifically to test whether one phenomenon may be stated to cause another occurring in a period that is later.

The findings for the research are in keeping with those of other detectives — including Dr.

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