New Study Shows Disproportionate Numbers of Payday Lenders in Bible Belt and Mormon West

by Christopher Peterson

A new study, conducted by Steven Graves and myself, finds a surprising relationship between populations of conservative Christian Americans and the proliferation of payday lenders. A draft of the study can be downloaded from SSRN, free of charge.

The natural hypothesis is to assume that given strenuous Biblical condemnation  of usury there would be more aggressive regulation and less demand for payday loans in these states, but ironically, the numbers show the opposite is true. 

The study is based on the largest and most comprehensive database of payday lender locations yet created. We developed an index that measures the density of payday lender locations based on the number of lenders within a geographic area, the number of payday lenders relative to population, and the number of payday lenders relative to bank branches. We also developed an index that measures the political power of conservative Christians within a state. This index has three components. First it is based on voting scores given to a state’s Congressional delegation by a panel of three leading Christian Faith based advocacy organizations including the Christian Coalition, the Family Research Council, and the Christian Action Network. Second, the Christian power index also included Congressional delegation scores compiled by Poole and Rosenthal, two widely respected political scientists that study these issues. And finally the index was also based on the percent of a state’s Evangelical or Mormon population. Our results are based on a simple correlation coefficient test comparing the payday lending density index to the Christian power index. Our hope was to create transparent results, that simply describe a commercial and spatial pattern of high cost lending that exists in our society.

One thing our data does not show is a causal relationship between faith and payday lending. For example, we believe there are many other variables that help explain why this pattern has emerged, in addition to faith. Nonetheless, our findings should serve as a wake up call to pastors, religious leaders, and people of faith that usurious lenders are thriving in their neighborhoods, communities, and states. Given the Bible’s injunction against usury, Christ’s example of expelling usurious money changers, and the ancient Christian tradition of sound financial stewardship, our study suggests that Christian Americans may want to pressure their political leaders to better effectuate Biblical values on consumer finance.

We believe it is sad that states with a pious and honorable religious heritage now disproportionately host predatory lenders.

Comments

[wholesale]

People preyed for a solution to their debt, and payday loans came along. Remember the story about the guy who was stuck on his house in a flood?
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[No Fax Payday Loans]

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[Online Loan Review]

This subject IS very ironic. But it seems that Payday loan centers are coming under more and more scrutiny. Let's hope so.

[grant]

People preyed for a solution to their debt, and payday loans came along. Remember the story about the guy who was stuck on his house in a flood? A guy came along in a boat and asked him if he would like a ride, and he said that God was going to save him. Then a helicopter came along, and he said no thanks, God was going to save him. Someone else comes along and he denies their help too, and dies. Then he asks God, "Why didn't you save me?" God says, "I sent three people!" Why are we complaining about the help that God has sent?

[James Smith]

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[Lyn]

I wish there were a lot less of these payday advance, title loan, and whatever else they call themselves operations. They're predators and parasites.

I think that the areas with the highest concentrations of these businesses are also poor areas. I'm positive that's the reason for their popularity in the Deep South. I was surprised that these payday loansharks are also popular in the Southwest. It's aggravating that these types of businesses that take advantage of poor people concentrate and thrive in poor areas.

I've noticed another similar problem. Many communities that host a large military base have a lot of pawn shops. Add in a large number of used car lots and a lot of adult entertainment/strip clubs and you have a whole little world off base ready to just suck the money out of the young enlisted servicemembers wallets.