As the holiday season gets well underway, many Floridians might be tempted to turn to payday loans for extra shopping cash.
Payday loans, small sums of money that are usually paid back with borrower’s next paycheck, are big business in Florida. The Florida payday loan industry lent $2.99 billion in 2012 and early 2013, according to Veritec Solutions, a research firm that tracks the industry for the state.
But recent research by the University of West Florida Haas Center for Business Research & Economic Development suggests the industry isn’t so big in Northwest Florida. County-specific data from the Florida Office of Financial Regulation shows that Escambia, Okaloosa, Bay and Santa Rosa counties produce fewer loans per person than does the state as a whole.
These findings contradict earlier studies by other organizations that suggested that the Pensacola area alone accounts for around 40 percent of Florida payday loan transactions in 2009, 2010 and 2011.
“The numbers that came out this summer just looked wrong for Pensacola, and in fact they were, ” said UWF economist Rick Harper. “The low- and moderate-income families that use payday lending could benefit greatly from financial education and access to cheaper borrowing. This new look at the data gives us a correct picture of where Florida’s payday lending hot spots actually are.”
FEWER LOANS IN NORTHWEST FLORIDA
Customers in Escambia County took out 547, 592 payday loans between July 2009 and Sept. 18, 2014, according to OFR data. That translates to 1.84 loans per person based on a 2010 population of 297, 619 – a figure that is 12 percent lower than the state average of 1.87 loans per person.
The OFR data counts payday loans for the counties in which they originated, even if the borrower traveled from another part of the state.
Further, the OFR figures indicate that Escambia County’s share of Florida payday loan originations declined consistently over the approximately five-year period. Escambia County accounted for 1.51 percent of the state’s payday loan transactions in 2009. By September 2014, that number had fallen to 1.2 percent.
Okaloosa County generated slightly fewer payday loans per person over the five-year period than Escambia did. From 2009 through September, Okaloosa payday loan branches generated 330, 230 loans, or 1.83 loans per person based on a 2010 population of 180, 822.
Bay County had significantly fewer loans per person. Payday lending locations in Bay County generated 290, 579 loans through September, or 1.72 loans per person based on a 2010 county population of 168, 852.
Meanwhile, 183, 540 payday loans were generated in Santa Rosa County, which works out to 1.21 loans per person for a 2010 population of 151, 372. The number of loans generated per person in Santa Rosa County was 42 percent lower than the state mean of 1.87.
On the other end of the spectrum, Osceola and Hillsborough counties had generated the most loans per person at 4.71 and 4.68, respectively.
Payday loans per person for a five-year period beginning in 2009 and ending Sept. 18, 2014. Per person totals are based on each county's 2010 population.
SOURCE: Florida Office of Financial Regulation, Haas Center and Studer Institute calculations.
Payday loans per person in each county for the five-year period compared to the state mean of 1.87 loans per person.
SOURCE: OFR, Haas Center and Studer Institute calculations.
EARLIER FINDINGS ERRONEOUS
The Haas Center’s findings contradict aspects of a report released earlier this year by the Research Institute on Social & Economic Policy at Florida International University in Miami.
That study, which received coverage in Northwest Florida media, stated that the Pensacola area was responsible for close to 40 percent of the state’s payday loan transactions in 2012 – far more than any other metropolitan area in Florida. The study relied on data from Veritec, the firm that tracks payday lending for the OFR.
Veritec reports released in 2010 and 2011 pegged Pensacola’s share of state payday loans at 39.9 percent for a period that ran from July 2009 to May 2010, and 40.5 percent from July 2010 through May 2011.
A similar report released by Veritec in 2009 stated that Pensacola accounted for only 8.8 percent of payday lending transactions in the state. Reports released after 2011 did not break down payday loan generation by metropolitan area.
Payday loans in Australia are part of the small loans market, which was estimated in 2008 to be between $800m and $1bn a year, although it seems likely that the true market was and currently is higher than this.
The growth of this market mirrors the growth in Canada, the United Kingdom, and the United States. Because the market for small loans...
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