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Importance of Subjective Financial Knowledge and Perceived Credit Score in Payday Loan Use

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Department of Family Consumer Science, Minnesota State University, Mankato, 102 Wiecking Center, Mankato, MN 56001, USA
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Department of Financial Planning, Housing, and Consumer Economics, University of Georgia, 205 Dawson Hall, 305 Sanford Drive, Athens, GA 30602, USA
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Department of Consumer Sciences, South Dakota State University, SWG 149, Box 2275A, Brookings, SD 57007, USA
*
Author to whom correspondence should be addressed.
Int. J. Financial Stud. 2019, 7(3), 53; https://doi.org/10.3390/ijfs7030053
Received: 24 June 2019 / Revised: 8 September 2019 / Accepted: 9 September 2019 / Published: 17 September 2019
This study examined the factors associated with consumers’ decisions to use payday loans. Using a sample of 24,201 respondents from the 2015 National Financial Capability Study (NFCS), structural equation modeling was used to analyze the relationships among the variables. The results indicated that payday loan use was associated with a series of consumers’ socio-psychological factors, including financial knowledge, perceived credit score, credit-card payment problems, and having emergency funds. The findings suggested that, to improve borrowing decisions and industry practices, discussions about consumers’ payday loan use and its underlying repayment problems should encompass policy intervention and institutional attention, rather than focusing on behavioral modification at the individual level alone. View Full-Text
Keywords: payday loan; financial knowledge; National Financial Capability Study; structural equation modeling payday loan; financial knowledge; National Financial Capability Study; structural equation modeling
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MDPI and ACS Style

Lee, J.M.; Park, N.; Heo, W. Importance of Subjective Financial Knowledge and Perceived Credit Score in Payday Loan Use. Int. J. Financial Stud. 2019, 7, 53.

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