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Business Ethics Journal Review

Volume 1, Issue 7, 2013

Robert Mayer
Pages 44-49

The Cost of Usury

When states deregulate the price of payday loans, most consumers will pay more for emergency cash than when a moderate usury cap is imposed. But advocates of price deregulation, including Matt Zwolinski, fail to discuss the distributive effects of their favored policy or to explain why most borrowers should pay more than is necessary for a cash advance. The objections Zwolinski raises against my argument for imposing a usury ceiling in this market miss the mark because they do not justify the increased cost consumers must bear when the price of a payday loan is allowed to float.