Abstract
The rapidly growing payday loan industry has been the object of growing concern nationwide. Many consumer advocates are harshly critical of the industry and several states have imposed restrictive regulation on payday lenders from price caps to all-out bans. At the federal level, the Consumer Financial Protection Bureau was established in part to consider uniform national regulations of payday lending. In this paper, I explore the main criticisms and reform proposals surrounding the payday loan industry and evaluate these through a review of the empirical literature. I find little evidence for the harshest criticisms of the industry or that the most restrictive reform proposals would be welfare-enhancing. Finally, I argue that substantial government intervention without such evidence is unjustified.
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