Sociologists have found that it’s not just individuals who pay a high price for payday lending practices. Whole neighborhoods pay, too, in more than just monetary ways.

As reported by Reuters:

As Congress debates financial regulatory reform and the Obama Administration advocates for greater consumer financial protection, a new study finds a need for Congressional action on fringe banking practices used heavily by financially vulnerable families. The study released today details the toll on communities with a high concentration of payday lending business and finds a clear association between the presence of payday lenders and neighborhood crime rates. The study recommends that Congress take action to cap payday lender interest rates at 36 percent, enacting for the entire country protections Congress put in place for U.S. military families.  The new study, entitled “Does Fringe Banking ExacerbateNeighborhood Crime Rates? Social Disorganization and the Ecology of PaydayLending,” was conducted by The George Washington University professors Charis E. Kubrin and Gregory D. Squires, along with Dr. Steven M. Graves of California State University, Northridge.

Further…

These broader community costs include higher rates of violent crime.  The study found that the association between payday lending and violent crime remains statistically significant even after a range of factors traditionally associated with crime are controlled for statistically.

The sociological commentary…

“As a criminologist, I can attest to the fact that there is woefully limited research on the impact of the behavior of financial institutions on neighborhood crime.  As our research demonstrates, these connections can no longer be ignored by criminologists and law enforcement officials across the country,” said Charis Kubrin.