In a perfect world it would be great if they didn't exist : how Australians experience payday loans

In the last few decades payday loans have mushroomed in many developed countries. The arguments for and against an industry which provides small, short-term loans at very high interest rates have also blossomed. This article presents findings from an Australian study to contribute to the international policy and practice debate about a sector which orients to those on a low income. At the heart of this debate lies a conundrum: Borrowing from payday lenders exacerbates poverty, yet many low-income households rely on these loans. We argue that the key problem is the restricted framework within which the debate currently oscillates.

National consumer credit laws, financial exclusion and interest rate caps : The case for diversity within a centralised framework

Australia is going through a major reform of consumer credit regulation, with the implementation of a proposal to transfer regulatory responsibility from the State and Territory Governments to the Commonwealth Government. While the broad policy approach is supported, the reform process has missed a significant opportunity to engage directly with issues of financial exclusion and with the potential role of regulation to reduce financial exclusion. The imposition of an interest rate cap can limit the impact of financial exclusion. However, the future of the existing interest rate caps is uncertain, given the diversity of approaches, and the heated debate that surrounds this issue. In the absence of support for regulatory initiatives to increase the availability of low cost, small loans, permitting regulatory diversity on this issue of interest rate caps, within an otherwise centralised regulatory framework., can minimise the impact of financial exclusion on consumers.

Interest rate caps : protection or paternalism

In a context where over-indebtedness and financial exclusion have been recognised as problems in Australia, it is undesirable that those who can least afford it, pay a high cost for short-term consumer credit. Evidence points to an increase in consumer debt in Australia and consequential over-indebtedness which has been shown to lead to a wide range of social problems.2 There is also evidence of financial exclusion, where consumers suffer a lack of access to mainstream financial services, and in Australia this is particularly the case with regard to access to safe and affordable credit.3 Financial exclusion can only exacerbate over-indebtedness, given that financially excluded, predominantly low income consumers , have been shown to turn to high cost credit to meet their short term credit needs. This is a problem that has been explored most recently in the Victorian Consumer Credit Review...

salud financiera y riesgo en los estados financieros de la empresa avianca del sector aeronautico

La globalización y la competitividad como realidad de las empresas, implica que los gerentes preparen a sus empresas de la mejor manera para sobrevivir en este mundo tan inestable y cambiante. El primer paso consta de investigar y medir como se encuentra la empresa en cada uno de sus componentes, tales como recurso humano, mercadeo, logística, operación y por último y más importante las finanzas. El conocimiento de salud financiera y de los riesgos asociados a la actividad de las empresas, les permitirá a los gerentes tomar las decisiones correctas para ser rentables y perdurables en el mundo de los negocios inmerso en la globalización y competitividad. Esta apreciación es pertinente en Avianca S.A. esto teniendo en cuenta su progreso y evolución desde su primer vuelo el 5 de diciembre de 1919 comercial, hasta hoy cuando cotiza en la bolsa de Nueva York. Se realizó un análisis de tipo descriptivo, acompañado de la aplicación de ratios y nomenclaturas, dando lugar a establecer la salud financiera y los riesgos, no solo de Avianca sino también del sector aeronáutico. Como resultado se obtuvo que el sector aeronáutico sea financieramente saludable en el corto plazo, pero en el largo plazo su salud financiera se ve comprometida por los riegos asociados al sector y a la actividad desarrollada.

Regulating the cost of small loans : overdue or overkill?

Small-amount short-term lending began in 1994 in response to the initial exemption of such loans from consumer credit regulation. Growing demand for such loans now produces industry turnover of approximately $800 million each year. Regulators recognised early the need for consumer protection due to the vulnerability of borrowers and the emergence of various predatory practices. This led to reforms designed to regulate these loans, prevent particular misconduct and provide remedies against injustice. Some were enacted as part of the National Consumer Credit Protection Act 2009 (Cth), which also imposed licensing and responsible lending requirements on lenders and increased consumer access to remedies. The Government has now introduced the Consumer Credit and Corporations Amendment (Enhancements) Bill 2011 which limits the price that can be charged for credit and restricts access to small loans. This article examines the extensive reforms which have taken place in this sector, and compares these regulatory approaches with the “bright line approach” of the Enhancements Bill. The article argues that the repercussions of this step will require careful monitoring to ensure that further harm is not suffered by those least able to bear it, and that the government will also need to facilitate other, more sustainable, solutions to the problem that small loans are currently used to solve. After we wrote this article, the Report of the Parliamentary Joint Committee on Corporations and Financial Services and the Report of the Senate Economics Legislation Committee on the Enhancements Bill were released. These are referred to in a postscript.

Phase two of the National Credit Reforms : examining the regulation of payday lenders

This study seeks to analyse the adequacy of the current regulation of the payday lending industry in Australia, and consider whether there is a need for additional regulation to protect consumers of these services. The report examines the different regulatory approaches adopted in comparable OECD countries, and reviews alternative models for payday regulation, in particular, the role played by responsible lending. The study also examines the consumer protection mechanisms now in existence in Australia in the National Consumer Credit Protection Act 2009 (Cth) (NCCP) and the National Credit Code (NCC) contained in Schedule 1 of that Act and in the Australian Securities and Investments Commission Act 2001 (Cth).

In the shadow of the welfare state : the role of payday lending in poverty survival in Australia

A defining characteristic of contemporary welfare governance in many western countries has been a reduced role for governments in direct provision of welfare, including housing, education, health and income support. One of the unintended consequences of devolutionary trends in social welfare is the development of a ‘shadow welfare state’ (Fairbanks, 2009; Gottschalk, 2000), which is a term used to describe the complex partnerships between statebased social protection, voluntarism and marketised forms of welfare. Coupled with this development, conditional workfare schemes in countries such as the United States, Canada, the UK and Australia are pushing more people into informal and semi-formal means of poverty survival (Karger, 2005). These transformations are actively reshaping welfare subjectivities and the role of the state in urban governance. Like other countries such as the US, Canada and the UK, the fringe lending sector in Australia has experienced considerable growth over the last decade. Large numbers of people on low incomes in Australia are turning to non-mainstream financial services, such as payday lenders, for the provision of credit to make ends meet. In this paper, we argue that the use of fringe lenders by people on low incomes reveals important theoretical and practical insights into the relationship between the mixed economy of welfare and the mixed economy of credit in poverty survival.

Students' low financial literacy makes understanding fees, loans, debt difficult

Financial literacy in Australia is low, particularly so in those under 25 years of age. What might be surprising is that it is low even among university students.

Gifts, Loans and Intergenerational Support for Young Adults

Young adults in the UK are increasingly dependent on family support to offset the costs of living independently. This article explores these complex intergenerational exchanges from the perspective of a group of single young adults in their mid-twenties to mid-thirties who had been in receipt of various forms of financial and material support from family members since leaving the parental home. We outline the nature of this support and then consider how these forms of assistance are understood by those in receipt of them. We conclude that the co-existence of a sense of both gratitude and discomfort which is often generated by these exchanges is managed but by no means resolved by a blurring of the boundaries between gifts and loans, a set of negotiations which may not even be an option amongst less advantaged young adults.

Macro determinants of nonperforming loans in Portugal

This study uses a VAR methodology to evaluate the impact of the macroeconomic conditions and money supply in the fluctuation of nonperforming loans for the Portuguese economy. Additionally, the feedback effect of nonperforming loans growth to the economy and specially to the credit supply is analised. The study is motived by the hypothesis that loan quality is procyclical and that the fast growth of credit supply has a positive relation with the growth of nonperforming loans. The hypothesis that nonperforming loans reinforce economic fragilities and credit market frictions is also tested. Empirical results corroborate both hypothesis presented. Hence, it was possible to establish that the macroeconomic conditions measured by GDP and unemployment and the fast growth of credit supply contribute to the development of nonperforming loans. Furthermore, the growth of nonperforming loans reinforces the economic cycle, as it contributes to the deterioration of macroeconomic conditions and creates frictions in the credit market that may results in a credit crunch.

Form letter: a printed, 2 1/2 page copy of Jarvis Conklin and Co. Mortgage, Loans and Municipal Bonds letter to S.D. Woodruff, signed by James Conklin

Form letter: a printed, 2 1/2 page copy of Jarvis Conklin and Co. Mortgage, Loans and Municipal Bonds letter to S.D. Woodruff, signed by James Conklin, n.d.

Letter regarding farm loans addressed to S.D. Woodruff from Jarvis, Conklin and Co.

Letter (1 page, printed) regarding farm loans addressed to S.D. Woodruff from Jarvis, Conklin and Co., Sept. 12, 1882.