Protecting the Desperate: The Regulation of Payday Lending

2015 ◽  
Vol 43 (1) ◽  
pp. 147-176
Author(s):  
Andrew J Serpell
Keyword(s):  
Consumer Credit ◽  
Law Reform ◽  
Payday Lending ◽  
Short Term ◽  
Payday Loans ◽  
The Law ◽  
The Right ◽  
Credit Contracts ◽  
The Cost

Payday loans are small-amount, short-term, unsecured, high-cost credit contracts provided by non-mainstream credit providers. Payday loans are usually taken out to help the consumer pay for essential items, such as food, rent, electricity, petrol, broken-down appliances or car registration or repairs. These consumers take out payday loans because they cannot — or believe that they cannot — obtain a loan from a mainstream credit provider such as a bank. In recent years there has been a protracted debate in Australia — and in several overseas jurisdictions — about how to regulate the industry. Recent amendments to the National Consumer Credit Protection Act 2009 (Cth) — referred to in this article as the 2013 reforms — are designed to better protect payday loan consumers. While the 2013 reforms provide substantially improved protection for payday loan consumers, further changes to the law may be warranted. This article raises several law reform issues which should be considered as part of the 2015 review into small amount credit contracts, including whether the caps on the cost of credit are set at the right level, whether the required content and presentation of the consumer warnings needs to be altered, whether more needs to be done to protect consumers who are particularly disadvantaged or vulnerable and whether a general anti-avoidance provision should be included in the credit legislation.

scholarly journals Information Asymmetries in Consumer Credit Markets: Evidence from Payday Lending

2013 ◽  
Vol 5 (4) ◽  
pp. 256-282 ◽  
Author(s):  
Will Dobbie ◽  
Paige Marta Skiba
Keyword(s):  
Moral Hazard ◽  
Adverse Selection ◽  
Regression Discontinuity ◽  
Credit Markets ◽  
Consumer Credit ◽  
Probability Of Default ◽  
Information Asymmetries ◽  
Payday Lending ◽  
Loan Market ◽  
Payday Loans

Information asymmetries are prominent in theory but difficult to estimate. This paper exploits discontinuities in loan eligibility to test for moral hazard and adverse selection in the payday loan market. Regression discontinuity and regression kink approaches suggest that payday borrowers are less likely to default on larger loans. A $50 larger payday loan leads to a 17 to 33 percent drop in the probability of default. Conversely, there is economically and statistically significant adverse selection into larger payday loans when loan eligibility is held constant. Payday borrowers who choose a $50 larger loan are 16 to 47 percent more likely to default. (JEL D14, D82, G21)

Proportionality and Force in International Law

1993 ◽  
Vol 87 (3) ◽  
pp. 391-413 ◽  
Author(s):  
Judith Gail Gardam
Keyword(s):  
Armed Conflict ◽  
Use Of Force ◽  
Fundamental Principle ◽  
Armed Conflicts ◽  
Customary Law ◽  
Law Of Armed Conflict ◽  
The Law ◽  
United Nations System ◽  
The Right ◽  
The Cost

Proportionality is a fundamental component of the law on the use of force and the law of armed conflict—the jus ad bellum and the jus in bello. In the former, it refers to a belligerent’s response to a grievance and, in the latter, to the balance to be struck between the achievement of a military goal and the cost in terms of lives. The legitimate resort to force under the United Nations system is regarded by most commentators as restricted to the use of force in self-defense under Article 51 and collective security action under chapter VII of the UN Charter. The resort to force in both these situations is limited by the customary law requirement that it be proportionate to the unlawful aggression that gave rise to the right. In the law of armed conflict, the notion of proportionality is based on the fundamental principle that belligerents do not enjoy an unlimited choice of means to inflict damage on the enemy. Since the entry into force of Protocol I to the Geneva Conventions of 12 August 1949, and Relating to the Protection of Victims of International Armed Conflicts, proportionality has been both a conventional and a customary principle of the law of armed conflict.

The Right to Indemnity between Master and Servant

1956 ◽  
Vol 14 (1) ◽  
pp. 101-111 ◽  
Author(s):  
J. A. Jolowicz
Keyword(s):  
Cold Storage ◽  
Common Law ◽  
Married Women ◽  
Law Reform ◽  
Recent Case ◽  
Legal Principle ◽  
The Common ◽  
The Law ◽  
The Right ◽  
Court Of Appeal

The proposition that a master, who has become liable for an injury caused by a servant acting in the course of his employment, can recover an indemnity from the servant is one which has been stated on a number of occasions, but until the recent case of Romford Ice & Cold Storage Co. v. Lister no clear authority could be cited in support. It is true that the master's rights against his servant have been canvassed in at least three modern cases, but in all of them the common law position has been obscured by the application of the Law Reform (Married Women and Tortfeasors) Act, 1935. In Romford Ice & Cold Storage Co. v. Lister, however, by what those interested in legal principle can only regard as a happy chance, it was necessary for the Court of Appeal to deal with the matter independently of the Act.

scholarly journals Payday Lending

2007 ◽  
Vol 21 (1) ◽  
pp. 169-190 ◽  
Author(s):  
Michael A Stegman
Keyword(s):  
Interest Rate ◽  
The State ◽  
Payday Lending ◽  
Short Term ◽  
Payday Loans ◽  
Ready Access

A “payday loan” is a short-term loan made for seven to 30 days for a small amount. Fees charged on payday loans generally range from $15 to $30 on each $100 advanced. A typical example would be that in exchange for a $300 advance until the next payday, the borrower writes a post-dated check for $300 and receives $255 in cash—the lender taking a $45 fee off the top. The lender then holds on to the check until the following payday, before depositing it in its own account. When the fee for a short-term payday loan is translated into an annual percentage rate, the implied annual interest rate ranges between 400 and 1000 percent. Virtually no payday loan outlets existed 15 years ago; today, there are more payday loan and check cashing stores nationwide than there are McDonald's, Burger King, Sears, J.C. Penney, and Target stores combined. For economists, several interesting issues arise in the study of payday loans: Is this just a situation in which willing customers and firms interact in the market for ready access to high-cost, short-term credit? Or does the payday loan industry encourage habitual borrowing and the snowballing of unaffordable debt in such a way that the state has a role to play in limiting consumers from their own excesses? Would a ban or overly restrictive regulations on payday lending just revive the market for loan-sharking? And what of a similar practice by mainstream banks, who regularly allow their customers to overdraw their checking accounts if they pay a fee comparable in size to a payday loan charge?

The Transactions Demand for Credit Cards

2007 ◽  
Vol 7 (1) ◽  
Author(s):  
Kathleen W. Johnson
Keyword(s):  
Credit Card ◽  
Consumer Credit ◽  
Credit Cards ◽  
Credit Card Debt ◽  
Financial Vulnerability ◽  
Short Term ◽  
Payment Instruments ◽  
The Cost ◽  
The Relationship

Abstract I argue that the measure of credit card debt used by researchers has grown rapidly in part because it captures debt arising from transactions in which a credit card is used because of its advantages over other payment instruments. Increases in debt stemming from such use may not signal greater household financial vulnerability if households are willing and able to repay this short-term debt. However, it may suggest that the cost of using credit cards to pay for purchases has declined relative to other payment instruments. I conclude that had transactions demand remained at its real 1992 levels, rather than growing almost 15 percent per year, measured credit card debt would have grown a bit less than 1 percentage point slower per year between 1992 and 2001. Moreover, I show that removing transactions demand from aggregate consumer credit can alter conclusions about the relationship between credit and consumption.

scholarly journals Rynek pożyczek pozabankowych w Polsce w świetle polityki niskich stóp procentowych banku centralnego

2015 ◽  
Vol 1 (3) ◽  
pp. 119-135 ◽  
Author(s):  
Anna Szelągowska
Keyword(s):  
Interest Rates ◽  
Social Life ◽  
Banking Sector ◽  
Payday Lending ◽  
Short Term ◽  
Payday Loans ◽  
Research Hypothesis ◽  
Alternative Sources

A large part of the society is still financially excluded from social life despitethe era of low or zero interest rates. Banks are not interested in rendering servicesto customers of limited means. In consequence, citizens excluded from the bankingsector are searching for the alternative sources to satisfy their financial needs.Money is supplied by payday loan providers which offer usurious short term loansat prices many times higher than bank prices. The article answers the followingresearch question: Is the payday lending market winning the competition withthe banking sector in Poland and if so, what is the reason in era of historic lowbasic interest rates and incomparably higher total costs of payday loans? Thefollowing research hypothesis was verified in the study: the lack of supervisionover payday loan companies in Poland contributes to usurious exploitation ofthe people excluded by banks, which results in a debt spiral for a considerablesegment of customers.

scholarly journals SECTION 27 OF THE INSOLVENCY ACT 24 OF 1936 AS A VIOLATION OF THE EQUALITY CLAUSE: A CRITICAL ANALYSIS

2016 ◽  
Vol 19 ◽  
pp. 1
Author(s):  
Zingaphi Mabe
Keyword(s):  
South Africa ◽  
South African ◽  
Law Reform ◽  
Department Of Justice ◽  
Current Form ◽  
The World ◽  
The Law ◽  
The Republic ◽  
The Right ◽  
Made In

The Constitution of the Republic of South Africa, 1996, is regarded as one of the most progressive constitutions in the world. As the supreme law in South Africa, it applies to all law and conduct. All South African laws must be consistent with the Constitution. Where there is an alleged violation of constitutional provisions, that law or conduct must be evaluated to establish whether or not it is consistent with the values of an open and democratic society based on fundamental human rights such as human dignity and the right to equality.The Insolvency Act and section 27 in particular which is the focus of this paper must be consistent with the Constitution. Section 27(1) provides:"No immediate benefit under a duly registered antenuptial contract given in good faith by a man to his wife or any child to be born of the marriage shall be set aside as a disposition without value, unless that man's estate was sequestrated within two years of the registration of that antenuptial contract."This section protects benefits arising from an antenuptial contract and given by a man to his wife or to a child born of their marriage, from being set aside as dispositions without value during sequestration proceedings. The same protection is not afforded however, to benefits given by the wife under an antenuptial contract. This also excludes benefits given by those in a same sex marriage, and limits the benefits available to children born of that form of marriage.As the right to equality in section 9 of the Constitution seeks to provide equal benefits before the law to persons in the same or similar positions by prohibiting unfair discrimination, the limitations in section 27 render it vulnerable to constitutional review.As the Insolvency Act has not been amended as a whole to accommodate the equality provisions in the Constitution, in its current form, section 27 seems to violate section 9(3) of the Constitution on the grounds of sexual orientation, marital status and birth.However, certain proposals have been made in the report by the South African Law Reform Commission on the Review of the Law of Insolvency to develop section 27 to comply with the Constitution. Further developments have been proposed by the Department of Justice and Constitutional Developments in its presentations to the Labour Market Chamber in 2003 and 2006.This paper examines section 27 of the Insolvency Act as it currently reads, within the context of the right to equality in section 9 of the Constitution. Current developments in respect of section 27 will be considered to illustrate progress made in reforming the section and whether the reform measures proposed will protect all those affected by the discrimination arising from section 27.The discussion opens with a consideration of the current dispensation and the question whether section 27 violates section 9(3) of the Constitution. Current developments will then be discussed in the light of the current proposals.

scholarly journals A NOVEL MODEL AND TOOL FOR ENERGY RENOVATION PLANNING IN FRENCH RESIDENTIAL BUILDINGS AND DISTRICTS

2018 ◽  
Vol IV-4/W7 ◽  
pp. 11-18
Author(s):  
K. Amokrane-Ferka ◽  
A. Ben Hamida
Keyword(s):  
Residential Buildings ◽  
Existing Buildings ◽  
Short Term ◽  
Energy Consumption Reduction ◽  
Consumption Reduction ◽  
The Right ◽  
The Cost ◽  
Different Characteristics ◽  
Novel Model

<p><strong>Abstract.</strong> Energy renovation of existing buildings is important for energy consumption reduction. In fact, it attracted the interest of governments in several countries for its effectiveness (e.g., 38<span class="thinspace"></span>% consumption reduction by 2020 predicted in France). To achieve such rates, major incentivizing measures were taken by governments to facilitate the funding of energy-oriented renovation projects for final users (e.g., households, communities). Despite all these efforts, a lot of obstacles are yet to be overcome like the lack of interest and involvement of the population, the lack of understanding of the economic equation for renovation, unawareness of governmental aids and support. In fact, most of the population does not fully understand the long-term investment benefits of renovation and look at short term-centered benefits. By taking this into account, the aim of our study is to design, develop and implement a simulation model and decisionmaking tool to assist final users. The first objective of this tool is to shed the light on the advantages and the benefits of renovation to achieve a maximum awareness. To this end, we studied and highlighted three types of incentives: economical, ecological and comfort. The second objective is related to the technical aspects of the project, where users simulate one or several renovations with different characteristics such as insulation materials, space heater, glazing type. Based on the selected parameters, users will be provided with the cost of renovation works, and achievable yearly savings (energy, money, CO<sub>2</sub>, etc.). Consequently, the user can make the right decision that suits his needs.</p>

scholarly journals SHARE IN LLP CHARTER CAPITAL AS PROPERTY: SOME ISSUES OF THEORY AND PRACTICE RELATED TO THE LEGISLATION OF THE REPUBLIC OF KAZAKHSTAN

2016 ◽  
pp. 0-0
Author(s):  
Сергей Скрябин ◽  
Sergey Skryabin
Keyword(s):  
Limited Liability ◽  
Special Kind ◽  
Theory And Practice ◽  
Legal Regime ◽  
The Law ◽  
The Republic ◽  
The Right ◽  
The Cost ◽  
A Share

The article investigates the issue of legal regime of a share in the charter capital of limited liability partnerships as a special kind of property. The author considers justified extending to this type of property of the rules of civil legislation on the law of obligations with certain peculiarities of the legal regime. These include peculiarities of definitions of authorized persons and parties liable; extending to their turnover of the rules on substitution of parties in the obligation; establishing the price of the shares in charter capital through a correlation with the property of the company itself, fixing of their price at a certain moment, preceding the transfer; changing of current rules on the charge of the share. The right to the share in the charter capital is determined as a prerequisite of enjoyment of rights and obligations of a participant, as well as the cost of the property belonging to the partnership.

Two Cheers for the Law

1972 ◽  
Vol 18 (1) ◽  
pp. 35-41
Author(s):  
Spencer Coxe
Keyword(s):  
Massive Resistance ◽  
The Poor ◽  
The Law ◽  
The Right ◽  
The Cost

Radicals of both the right and the left prefer not to work within the system of law, which they find unresponsive to today's needs. A lack of confidence in the courts grows as judges and juries reflect community sentiment instead of the law, and court rulings are openly defied when there is massive resistance. The cost and time involved in bringing a case to court are major obstacles to the poor and the uneducated. Judges of varying intelligence, character, and political standing make decisions contradictory to one another.

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