Why Do Payday Lenders Enter Local Markets? Evidence from Oregon

Why Do Payday Lenders Enter Local Markets? Evidence from Oregon This study analyzes payday lenders’ entry strategies in the state of Oregon in order to look for changes in the nature of the industry and its relationship to traditional financial institutions. The results of fixed-effects logit regressions suggest that payday lenders have started to enter areas already being served by banks. Furthermore, the presence of “incumbent advantage” in entry decisions may also have implications concerning the level of competition in the industry. Finally, since payday lenders also enter areas with large Hispanic populations, it is still possible that payday loans represent the sole source of credit for certain segments of the population. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Why Do Payday Lenders Enter Local Markets? Evidence from Oregon

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Publisher
Springer Journals
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-008-9194-8
Publisher site
See Article on Publisher Site

Abstract

This study analyzes payday lenders’ entry strategies in the state of Oregon in order to look for changes in the nature of the industry and its relationship to traditional financial institutions. The results of fixed-effects logit regressions suggest that payday lenders have started to enter areas already being served by banks. Furthermore, the presence of “incumbent advantage” in entry decisions may also have implications concerning the level of competition in the industry. Finally, since payday lenders also enter areas with large Hispanic populations, it is still possible that payday loans represent the sole source of credit for certain segments of the population.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Nov 6, 2008

References

  • Entry in local telecommunication markets
    Alexander, D.L.; Feinberg, R.M.
  • Entry into banking markets and the early-mover advantage
    Berger, A.N.; Dick, A.A.

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