Over at Credit Slips, law prof Adam Levitin has posted The Miscalculations Underlying Miller & Zywicki’s Payday Loan Paper.
The beginning of Levitin’s post will give you a sense of it:
Earlier this month Professors Todd Zywicki and Thomas Miller, Jr. wrote an op-ed in the Wall Street Journal arguing against payday loan regulation, based on their new empirical paper. Miller & Zywicki wrote:
Our findings will startle the rule writers at the CFPB. Contrary to the research cited in the CFPB’s 2017 rule, which claimed that “loans are almost always made at the maximum rate permitted,” we found that neither fees paid nor loan amounts inexorably rose to maximum allowable levels when those allowable levels were reasonable.
The implication is that there must be price competition among payday lenders with supply and demand setting prices, vitiating the need for regulation.
The problem is that Miller and Zywicki have incorrectly calculated the maximum fees permitted in numerous states.