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| Cash Loan: Born Evil? Evidence from Regression Discontinuity |
| WANG Jingyi
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| National School of Development & Institute of Digital Finance, Peking University |
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Abstract Cash loans are controversial because of their high interest rates, unsecured, no-scenario, and totally online. On the one hand, its service objects have certain inclusive characteristics, and some unemployed lending by some practitioners make the industry gradually become the object of strict supervision. In order to measure the impact of the cash loan interest rate on the loaner's loan amount and overdue performance, we use the full loan data of April-August 2017 of a cash loan platform. We perform a regression discontinuity design. We find that as interest rates fall as the level rises, the amount of loans increases and the overdue rate decreases slightly, and this effect varies with loan maturities, interest rates, applicants' financial status, and media sentiment. Combining the research on the payday loan in the United States, we believe that cash loan satisfies the actual and rational needs of some people to a certain extent.
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Received: 01 September 2018
Published: 21 December 2018
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