Law Commons^™

Regulating On The Fringe: Reexamining The Link Between Fringe Banking And Financial Distress, Jim Hawkins

Indiana Law Journal

Critics of fringe banking—products like payday loans, pawn loans, and rent-toown leases—frequently argue that these products cause borrowers to experience financial distress. This argument has enormous intuitive appeal: Fringe credit is very costly, and usually the borrowers who use it are already in a serious financial bind. Taking on additional debt and paying high prices for it, the reasoning goes, drive them over the brink. Surprisingly, however, linking financial distress to fringe banking is extremely difficult to do. This Article represents the first attempt to uncover the relationship between fringe banking and financial distress by systematically analyzing the structure of …