More Research Needed to Determine Costs and Benefits of Payday Loans, Report...

More Research Needed to Determine Costs and Benefits of Payday Loans, Report Finds


WASHINGTON, May 7, 2012 /PRNewswire-HISPANIC PR WIRE/ — The United States Hispanic Chamber of Commerce (USHCC) today released a report on the consumer and social impact of payday loans, underscoring the need for additional research to inform policymakers and ensure access to safe and reliable short-term credit for consumers and small businesses.

“We constantly hear from our members that businesses need better access to credit,” said USHCC President & CEO Javier Palomarez. “Because responsible consumer credit plays an important role in supporting Hispanic-owned businesses, we need to understand the effects of short-term loans better before lawmakers and regulators impose unwarranted regulatory burdens that inhibit the free-flow of credit to our communities.”

The report, entitled The Consumer and Social Welfare Benefits and Costs of Payday Loans: A Review of the Evidence, reveals there are no certain or confident grounds to conclude that payday loans diminish or increase consumer or social well-being. The study reports that “despite a dozen studies, the question of how payday credit affects its users remains unanswered.”

Robert J. Shapiro Ph.D., an internationally renowned economist and former Under Secretary of Commerce for Economic Affairs in the Clinton Administration, conducted the review on behalf of the USHCC and wrote: “Additional research should be conducted to provide more definitive answers, [preferably] before regulators bar or sharply limit access to short-term credit.”

The Consumer Financial Protection Bureau (CFPB), a new federal regulatory agency charged with overseeing financial products offered to consumers, has recognized the need for more research and is taking a data-driven approach to its assessment of the payday loan market.

“The purpose of all our research and analysis and outreach on these issues is to help us figure out how to determine the right approach to protect consumers and ensure that they have access to a small loan market that is fair, transparent, and competitive,” CFPB Director Richard Cordray said at a recent field hearing in Birmingham.

Palomarez observed that “Dr. Shapiro’s findings demand that regulators better understand the impact of the credit market before they make decisions regarding an important credit source for many businesses that are significant in the Hispanic community. We continue to support and encourage responsible consumer credit access that can help businesses thrive.”

About the United States Hispanic Chamber of Commerce

Founded in 1979, the USHCC actively promotes the economic growth and development of Hispanic entrepreneurs and represents the interests of over 3 million Hispanic-owned businesses in the United States that combined generate in excess of $465 billion annually. It also serves as the umbrella organization for more than 200 local Hispanic chambers and business associations in the United States and Puerto Rico. For more information, visit

SOURCE United States Hispanic Chamber of Commerce

More Research Needed to Determine Costs and Benefits of Payday Loans, Report Finds