Does the payday loan industry suffer from asymmetric information, why or why not? Does the payday...

Does the payday loan industry suffer from asymmetric information, why or why not?
Does the payday loan industry hurt the poor or provide a necessary service?

Expert Solution

Yes,pay day loan industry suffer from asymmetric information because when customer hide some crucial facts regarding their income then bank is unable to know about its current position and if he is unable to declare critical facts then it will leads to bankruptcy.bank will lose their money.now a days payday loan industries is tries to collection more information before giving loan.

payday loan means providing a small amoun of loan to the consumer when they need because they need it urgently and cannot wait for the next salary.hence pay day loan is provided on the basis of current salary slip.

Payday loan industry charges higher interest on loan.Its helpful for giving loan to poor but its interest rate is also higher which leads to higher burden on consumer loan.

Hence charging higher loan is one of the drawback of these services.while it helps the cutomer by providing timing relief to the needy.

Rahul Sunny answered 2 years ago

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Does the payday loan industry suffer from asymmetric information, why or why not? Does the payday...

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