Payday alternative loans: PAL or Foe?

Anna-Leigh Stone

Finance Research Letters, 2024, vol. 66, issue C

Abstract: Payday alternative loans (PALs) are small, short-term loans granted by federal credit unions. This paper examines the history of these loans, characteristics of credit unions that grant PALs, and how these loans impact credit risk. Credit unions with a low-income designation offer PALs and make a higher amount and number of PALs in terms of the loan portfolio. Credit unions that offer PALs have lower loan delinquency rates and do not have more one-year forward-looking credit risk. The findings contribute to the broader literature on payday loan alternatives and credit union risk taking.

Keywords: Credit unions; Credit risk; Payday alternative loans (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324006962

DOI: 10.1016/j.frl.2024.105666

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