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Different and Unequal: Payday Loans and Microcredit in Canada

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  • Visano, Brenda Spotton

Abstract

The current practice of offering micro-financial services through quasi-financial organizations places at a significant disadvantage those unable to otherwise access mainstream credit. In a survey of the history, nature and current scope of microcredit and payday lending in Canada, this paper argues that the expectation of full cost recovery in the provision of these services is economically detrimental to those financially excluded. Yet, these fringe banking services have the potential to be a pathway to financial inclusion, and with it the economic improvement of the individuals who use the services, if we acknowledge and adjust—through regulation—for the social costs and benefits that exist over and above the private sector expenses and revenues.

Suggested Citation

  • Visano, Brenda Spotton, 2008. "Different and Unequal: Payday Loans and Microcredit in Canada," The Journal of Economic Asymmetries, Elsevier, vol. 5(1), pages 109-123.
    • Handle: RePEc:eee:joecas:v:5:y:2008:i:1:p:109-123
    DOI: 10.1016/j.jeca.2008.01.009
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    References listed on IDEAS

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    1. Rafael Gomez & Eric Santor, 2001. "Membership has its privileges: the effect of social capital and neighbourhood characteristics on the earnings of microfinance borrowers," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 943-966, November.
    2. Rafael Gomez & Eric Santor, 2001. "Membership has its privileges: the effect of social capital and neighbourhood characteristics on the earnings of microfinance borrowers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(4), pages 943-966, November.
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    Cited by:

    1. Eoin McLaughlin & Rowena Pecchenino, 2022. "Fringe banking and financialization: Pawnbroking in pre‐famine and famine Ireland," Economic History Review, Economic History Society, vol. 75(3), pages 903-931, August.

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    More about this item

    Keywords

    I3; G21; N82; Payday lending; Microcredit; Fringe lending;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N82 - Economic History - - Micro-Business History - - - U.S.; Canada: 1913-

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