In 2013 Finland effectively banned payday loans by bringing in a maximum interest rate, banning paid text messages to request the loans, and mandating more thorough background checks on borrowers. The measure was intended to curb excessive borrowing among young people, and a new study has found that it was successful in that aim.
Helsinki University’s Institute of Criminology and Legal Policy studied nearly 2,000 debt judgements from 2012 to 2014. They found that the reform brought a reduction in the number of debt cases among young people aged 18-34.
"It looks to have reduced indebtedness, but on the other hand the fear was that it could increase the amount of debt [people take on] and the reform did partly do that," said the Institute’s director of research Karoliina Majamaa.
In practice that means that young adults have fewer problems with payday loan debt, but the problems that come to light involve greater sums.
Among the over-55s, however, indebtedness due to payday loans has grown compared to other forms of borrowing.