Regression Discontinuity and Identification

Our interest is with in calculating the results of payday advances on customers. Nevertheless, pay day loans aren’t arbitrarily assigned to clients. Customers whoever applications are declined are greater credit dangers to your company and typically display low income and even even even worse credit records. Thus the noticed results for those who use (don’t use) payday advances are not always an indication that is good of results for many individuals who don’t use (use) pay day loans. Prior U.S. research reports have mostly addressed this recognition issue by exploiting variation that is geographic use of pay day loans across or within states in the usa as a couple of normal experiments. Our extremely rich information on credit ratings for rejected and accepted loan candidates permits us to adopt a RD approach and estimate LATEs, exploiting rejected candidates with fico scores just below company thresholds as a counterfactual for effective candidates with scores just above thresholds. Read more →