The emerging payday loan industry is one of the fastest growing segments in the broader consumer financial services market. One estimate suggests that the number of payday loan offices nationwide increased from roughly 300 in 1992 to nearly 10,000 by 2001 (Brown, Findlay, Lehman, Maloney and Meehan, 2004). The Community Financial Services Association of America (CFSA), a trade group representing the payday loan industry, currently reports on its website (www.cfsa.net) that there are over 15,000 payday advance locations nationwide extending roughly $25 billion in short-term credit annually.
In Indiana, trends appear to mirror the nationwide growth in this industry. According to the Indiana Department of Financial Institutions (2006), there are a total of 606 licensed payday loan locations in the state. Of those, just 30, or less than 5 percent, were licensed and operational before 1996, an over twenty-fold increase in payday loan storefront locations in the last decade. In my city of Marion, Indiana, the DFI report identifies at least seven payday loan firms operating nine different storefront locations. Four of those locations, or roughly half of the shops in the city, have been operational only since 2004. Only one location was in operation prior to 1996. Clearly, the demand for short-term credit is booming, and cash advance firms have responded rapidly to meet this market demand.
