Property values fall and crime rates rise when payday cash advance lenders move to the neighborhood, according to a new study. This is not the first time the two have been connected. However, the literature on the subject goes back and forth, and doesn’t always reach the same conclusions. The total impact of personal loan companies is not entirely known. It may be extremely hard 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
There was a new study that looked again at the connection between crime and payday lending. It said that crime went up because of pay day loan lenders, WalletPop states. 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 actually a paper that has been around since 2009. The theory that frames the report is social disorganization. It essentially states the most significant thing to influence crime is environment. Things get worse in poverty areas when a payday lender enters the environment as a disorganized group.
Expressing what was already said
The study contends that Seattle crime rates are highest in the areas with the highest concentration of payday cash advance lenders and the issue has only become worse as time goes on and the number of personal loan companies increases. The study shows that pay day loan lenders will drive up crime rates and is done well. There was a rise of crime of only 1 percent shown in a 2010 study of payday loans and crimes done by Heather Luea. It should also be noted that one of the most proximate causes of crime is poverty, and payday loan lenders cater more to people who don’t totally rely on banks and charge cards for sources of credit. Areas that have more crime are areas that have always had crime.
Both sides of the issue
There has been a long back and forth in academia concerning whether payday loans are good, bad or in a moral gray area. There are surely correlations with crime and personal loan companies while there have been accusations of bias and other concerns for pay day loan positives. However, household income for the upper 20 percent of income earners has been increasing at a steady clip for the past 30 years however held fairly flat for the lowest 40 percent, according to United States Census data accessible on Wikipedia. That’s demographic that payday lenders cater to. Nobody has suggested how to help the individuals on the bottom. Without payday loans, they’ll need another solution.
Citations
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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