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The Annals of Regional Science

Erschienen in:

02.01.2020 | Original Paper

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

verfasst von: Hyoung Jun Kim, Bo Kyeong Lee, So Young Sohn

Erschienen in: The Annals of Regional Science | Ausgabe 1/2020

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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.

Vorheriger Artikel New business location: how local characteristics influence individual location decision?

Nächster Artikel Correction to: Regional disparity of medical resources and its effect on age-standardized mortality rates in Korea

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The definition of payday lender or payday loan differs according to national financial policy. This study concerns “Sa-Chae (私債)” in Korea, which covers an unsecured loan for subprime credit. This paper uses ‘payday loan service’ to describe Sa-Chae in Korea because Sa-Chae lender’s business type and its target borrower are similar to payday loan.

See https://paydayloaninfo.org/state-information.

Understanding Payday Loan Service Providers, May 17, 2012, Financial Committee of Korea.

Enactment of the registration of payday loan service providers and the protection of users (Act 6706, October 27, 2002).

A sole proprietorship payday lender must hold KRW 50,000,000 when registering, while a corporate payday lender must hold KRW 100,000,000 when registering.

See http://www.yonhapnews.co.kr/bulletin/2014/05/02/0200000000AKR20140502176400002.HTML.

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Titel: Comparing spatial patterns of sole proprietorship and corporate payday lenders in Seoul, Korea
verfasst von: Hyoung Jun Kim
Bo Kyeong Lee
So Young Sohn
Publikationsdatum: 02.01.2020
Verlag: Springer Berlin Heidelberg
Erschienen in: The Annals of Regional Science / Ausgabe 1/2020
Print ISSN: 0570-1864
Elektronische ISSN: 1432-0592
DOI: https://doi.org/10.1007/s00168-019-00969-0

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