Abstract
AbstractRegulated small‐dollar installment lenders do not operate within Arkansas, but they do in all six states that border Arkansas. We can measure the effects of Arkansas' 17% interest rate cap because Arkansas residents obtain installment loans only from out‐of‐state lenders. On average, Arkansas residents borrow $1051 at an annual percentage rate of 93%, when incorporating travel costs. Arkansas residents borrow at a rate of 90.4 loans per 10,000 people, compared to 524.5 per 10,000 for residents of the six bordering states. Residents in Arkansas counties that border other states hold 96.7% of out‐of‐state‐supplied small‐dollar installment loans. Statistical tests confirm that the interest rate cap affects residents in the interior counties of Arkansas more than it does residents in the perimeter counties.
Published Version
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