Funded on June 1, 2023

The economic gap between Black people and white people living in The Mississippi Delta continues to be exacerbated by predatory payday lending practices. Since the 1990s, payday lending availability has increased exponentially in Mississippi. Despite expanding access to credit for Black families with low incomes, economic data do not suggest that the increased access to this kind of lending has positively impacted economic well-being in the region. Not only is payday lending often predatory and designed to extract more value through interest payments even than the initial loan sum, but it is also a symptom of much deeper issues of economic inequality. These loans have led many borrowers with low incomes to take on increasing amounts of debt. Previous research on this topic highlights the impacts of payday lending in major cities but has understudied the causes and effects of payday lenders disproportionately targeting low-income majority Black people living in rural communities. This project will investigate the extent to which the Mississippi Title Pledge Act, Mississippi Check Cashers Act, and Mississippi Credit Availability Act, have enabled pay lending companies to engage in predatory practices that disproportionately affect Black residents in the Mississippi Delta, comparing this policy framework to that of Arkansas and Alabama.

The research team will ask:

1.     How does the geographic location of payday lenders impact the financial health of Black communities?

2.     How does payday lending impact more affordable lending institutions, such as community development financial institutions in the Mississippi Delta?

3.     To what extent do Mississippi's payday lending laws allow payday lenders to target African Americans in the Mississippi Delta disproportionately?

4.     Do other states' policies on payday lending create better outcomes in racial disparities in access to credit and cost of credit?

This research will contribute to the academic literature on systemic racism, antiracism, and the social science of finance more broadly. It will also help increase the understanding of the effects and origins of Mississippi's current economic policy framework.