A new study links payday loan lenders to increasing crime rates and falling property values. This is not the first time that a connection has been discussed between payday lending and crime, however the academic literature until now has never had much consensus. The total impact of payday lenders is not entirely known. It might be impossible to know if payday loans are truly a force for good, evil or occupies a gray area.
How cash advance lenders are connected to crime
WalletPop reports that a connection between payday advance lenders and crime would suggest payday loan lenders are responsible for crime rate increases after re-examination. Charis Kubrin and Gregory Squires of George Washington University and Steven Graves of California State University Northridge all worked together to write the study called “Does Fringe Banking Exacerbate Neighborhood Crime Rates?” which was really a paper that has been around since 2009. Environment influences crime over anything else, according to the report which utilizes social disorganization for its framework. The contention is that pay day loan lenders enter environments that are highly disorganized, such as poverty and crime-ridden areas, and cause things to get worse.
Just a repeat
Areas with more payday cash advance lenders have higher crime rates in Seattle, according to the study. It claims that the more payday lenders, the higher the crime rate. The study is meticulously done, and does make a case for its central premise of payday loan lenders driving up crime rates. There was a rise of crime of only 1 percent shown in a 2010 study of payday loans and crimes done by Heather Luea. Poverty is a huge trigger of crime while individuals who are not able to get charge cards or rely on banks tend to use pay day loan lenders more often. More crime in an area causes more crime. That is the real problem.
Both sides of the issue
Deciding whether or not payday loans are morally acceptable has been hard for many. There are surely correlations with crime and payday lenders while there have been accusations of bias and other concerns for pay day loan positives. The United States Census data on Wikipedia shows that household income for the lowest 40 percent has stayed the same while income for the top 20 percent has increased steadily for the last 30 years. That’s demographic that personal loan companies cater to. Nobody has suggested how to help the individuals on the bottom. Without payday loans, they will need another solution.
Information from
WalletPop
walletpop.com/2011/05/12/payday-lenders-fuel-crime-drive-down-property-values/
Fringe banking and crime study
gwu.edu/|newsctr/09/pdfs/Payday_Lending_and_Crime_Working_Paper.pdf
Wikipedia
en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg
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