Payday Lending

There is a demand for these loans, but also miscalculations and longer-term problems for borrowers, including for their families.

You've set the bar high: "very short-term loans at very high annualized interest rates." So I'll say that these loans benefit few people

This does not mean regulation of the sector's practices is unwarranted, but the research on access to credit is pretty clear.

Seem like good arguments on both sides

Meltzer (2011) finds that payday loans do not alleviate hardship. But banning the market may be dominated by stronger regulation.
-see background information here

Disclosure rules and banning rollover makes more sense. Sometimes people need credit.

The best evidence (see link) finds sharp welfare declines from interest rate caps in a somewhat similar market.
-see background information here

Some would gain and some would lose—payday loans are not all harmful

It depends on what would replace payday loans as a source of short-term liquidity. Better information & lending mechanisms need to be tried.

Better would be to provide some regulation of interest rates.

I generally favor allowing voluntary transactions, but I suspect that demand is usually driven by behavior inconsistent with rationality.

i doubt it is a generically good idea, but the research is very mixed, despite many, many papers; see the literature review by morgan et al
-see background information here

-see background information here

Payday loans at usurious interest rates exploit borrowers' ignorance.

Most $ spent are heavy users which does not seem like a good arrangement. Occasional users can benefit. More wealth at bottom would be best.

A ban would help those exploited by PD loans, but would harm those for whom such loans are a lifeline. "Most" is difficult to determine.

There is evidence that taking a payday loan increases bankruptcy but should first try other measures such as enforcing better disclosure.
-see background information here

On the one hand, some are victimized; on the other, some have no other source of needed credit. Not an easy call without facts.

A complete ban seems extreme as a way of protecting borrowers from predatory lending.

No evidence of market power in this industry, so this seems to go against revealed preference. What markets arise if this is banned?

Loan sharks may be worse.