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Title: Policy to Protect Financially Vulnerable Populations: A look at the 2007 Military Lending Act

Citation Type: Miscellaneous

Publication Year: 2020

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Abstract: In this paper, I use geospatial data on payday lending storefronts to assess a landmark federal policy initiative: the 2007 Military Lending Act (MLA), which created a federal interest rate cap on consumer loans to military members. I ask whether the implementation of the MLA resulted in a reduction in the number of payday storefronts within military communities, leveraging state-level variation in payday lending laws in Colorado, Washington, and Oregon. The analysis shows that the MLA alone had virtually no impact on reducing payday loan exposure in military communities. In contrast, state-wide restrictions capping interest rates for all consumers was effective in reducing payday lender presence in all communities across the state, including military areas. These findings suggest that MLA as implemented was a misaligned policy solution and that universal social reforms may be most effective in reducing exposure to subprime financial services. I conclude with a discussion of a public alternative to payday lending – postal banking – and how this option could be enhanced to ensure military access to low-cost financial services.

Url: https://ipums.org/sites/www.ipums.org/files/doherty_bea.pdf

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Authors: Doherty Bea, Megan

Publisher: University of Wisconsin-Madison

Data Collections: IPUMS NHGIS

Topics: Other, Poverty and Welfare

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