Economics > General Economics
[Submitted on 17 Sep 2025
(v1)
, last revised 25 Sep 2025 (this version, v2)]
Title: Demand and consumer surplus in the payday-loan market: Evidence from British Columbia
Title: payday贷款市场中的需求和消费者剩余：来自不列颠哥伦比亚省的证据
Abstract: This study examines how interest rate caps affect the demand for payday loans, using aggregate data from British Columbia (2012--2019) during which the province's maximum fee was reduced from \$23 to \$17 and then to \$15 per \$100 borrowed. Estimating a linear demand function via OLS, we find that lowering interest rate caps significantly increases loan demand. We estimate that the \$8 decrease, from \$23 to \$15 per \$100, raised annual consumer surplus by roughly \$28.6 million (2012 CAD). A further reduction to \$14, starting in January 2025, would add another \$3.9 million per year. These results suggest that stricter interest rate caps can yield substantial consumer welfare gains.
Submission history
From: Tim Zhang [view email][v1] Wed, 17 Sep 2025 21:16:52 UTC (6 KB)
[v2] Thu, 25 Sep 2025 13:46:16 UTC (6 KB)
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