The consequence of Cash Advance Bans on Cash Advance Use

Before presenting our results that are main we assess the comparability associated with therapy and control states. State policy toward payday advances just isn’t determined arbitrarily; the choices of legislatures or courts to allow or ban payday advances may rely on facets being correlated aided by the behavior of borrowers into the state. As an example, growing loan that is anti-AFS in a situation may simultaneously cause borrowers to get rid of installment loans online Virginia utilizing such loans and politicians to pass through legislation against them. 18

One method to investigate this problem is through taking a look at preperiod styles into the two sets of states. It might suggest that the changes in policy are confounded by secular trends in AFS usage if we observe that demand for AFS borrowing in prior years increases or decreases in the treatment states relative to the control states. Although we can not straight gauge the parallel-trends assumption by which our difference-in-differences design relies, watching differences that are important the pretreatment trends might claim that the styles differed within the therapy duration also.

Preferably, we’d undertake this analysis with every for the result variables inside our analysis.