The "one lesson" of economics emphasizes considering the unintended consequences of an act or policy. I imagine that legislators in the state of Georgia intended to help those in tough financial spots when the state banned payday lending in May 2004. Economist Donald Morgan of the Federal Reserve Bank of New York has studied the consequences of this legislation by comparing Georgia citizens to those in states who did not pass payday lending laws (he also looked at North Carolina residents, whose government has enacted some restrictions). See this short mention of the study in Business Week.
Are these consumers better off? It would appear NOT: "compared with households in all other states, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate." Oops.
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