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Comparing spatial patterns of sole proprietorship and corporate payday lenders in Seoul, Korea

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  • Hyoung Jun Kim

    (Yonsei University)

  • Bo Kyeong Lee

    (Korea Research Institute for Human Settlements)

  • So Young Sohn

    (Yonsei University)

Abstract

The financial regulation lowering the interest rate cap has changed the business model of payday loan services, and as such, we expect that the location of payday lenders may change as well. In particular, because financial business conditions for sole proprietorship and corporate payday lenders differ, their target customers are also expected to vary. The aim of this study is to identify and compare the spatial patterns of corporate and sole proprietorship payday lenders after the implementation of the financial regulation. In a case study of Seoul, Korea, we use a negative binomial regression for the number of corporate and sole proprietorship payday lenders after controlling for demographic conditions. Eigenvector spatial filtering is utilized to take into account the spatial autocorrelation among administrative regions in Seoul. The results from the regression analyses reveal that only sole proprietorship payday lenders are sensitive to less expensive housing and larger traditional markets. Our findings suggest that regulations that decrease the maximum payday loan interest rate can cause financial asymmetry in that economically distressed citizens may be more exposed to unhealthy payday lenders.

Suggested Citation

  • Hyoung Jun Kim & Bo Kyeong Lee & So Young Sohn, 2020. "Comparing spatial patterns of sole proprietorship and corporate payday lenders in Seoul, Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(1), pages 215-236, February.
    • Handle: RePEc:spr:anresc:v:64:y:2020:i:1:d:10.1007_s00168-019-00969-0
    DOI: 10.1007/s00168-019-00969-0
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    More about this item

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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