Essays in Consumer Finance: Bankruptcy and Fringe Banking

Abstract

This dissertation consists of three essays related to consumer financial issues of often struggling and low-income populations. The first chapter studies the joint use of payday loans and pawnshop loans. While these two forms of credit may be seen as substitutes, I find that allowing individuals to roll over payday loans causes these two services to be used together. I use variation in state laws, along with national level survey responses and pawnshop location data to study this effect. The second essay focuses on a particular aspect of payday loans, the length of time someone has to repay them. The findings in this essay reveal that individuals are only slightly more likely to repay their loan if they are given additional time. A regression discontinuity approach is used to measure repayment effects. The third essay examines home ownership for individuals who file for bankruptcy. In states where individuals are faced with low levels of homestead exemptions when filing are not able to reach the same status of non-filers, even 10 years after bankruptcy. I use a national survey to examine these effects.