The Effect of Payday Lending Restrictions on Liquor Sales

  title={The Effect of Payday Lending Restrictions on Liquor Sales},
  author={Harold E. Cuffe and Christopher G. Gibbs},
  journal={Banking \& Insurance eJournal},
We exploit a change in lending laws to estimate the causal effect of restricting access to payday loans on liquor sales. Leveraging lender- and liquor store-level data, we find that the changes reduce sales, with the largest decreases at stores located nearest to lenders. By focusing on states with state-run liquor monopolies, we account for supply side variables that are typically unobserved. Our results are the first to quantify how credit constraints affect spending on liquor, and suggest… 

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