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This paper explores price-volume-credit risk relationships in the regulated small loan portion of the consumer finance industry. We seek insight into two questions which are basic to public policy decisions concerning the enactment of legal ceilings on rates, limits on loan sizes, and restrictions on entry in small loan legislation. These questions are: When legal rate ceilings are higher, do licensed small loan lenders accept poorer credit risks? When legal rate ceilings are higher, will the availability of loans (amount of loans made or outstanding) be greater or less? If the assumption of competition were applicable, the answers to these questions would be simple and direct: that licensed lenders would be forced to accept poorer credit risks and the availability of loans would be greater when legal rate ceilings are higher. The converse, of course, would be the case when legal rate ceilings are lower. In almost every state there are small loan laws which limit the price of loans and the maximum loan size. But the assumption of competition is not applicable since the regulatory philosophies applied by the states vary from fairly strict public utility-type regulation in New York to relatively free entry and high rate and loan size limits in several southern states. We turn, then, to the differences in price-volume-credit risk relationships among the states under conditions of imperfect competition to answer the two questions raised. [ABSTRACT FROM AUTHOR]

Recent research has established that finance companies accept poorer credit risks for personal loans where legal rate ceilings are higher. This finding suggests that the volume of personal loans extended or outstanding might also be positively associated with legal rate ceilings, but the supply of finance company personal loans has displayed positive, negative, and zero correlations with interest rate levels. There are two major reasons for this past chaos concerning supply: The credit data utilized have been faulty, and the model specifications have been inadequate. The purpose of this paper is to overcome these deficiencies. The first section below contains a brief description of the credit data that will be employed. The second section contains our model specifications. The test results are presented in section three. [ABSTRACT FROM AUTHOR]

The article examines the market for consumer installment credit in the U.S. since World War II. The author discusses the basic market structure--which comprises cash lending and installment financing--and notes how, at the local level, it tends to be monopolistic. Changes in market structure witnessed since World War II include explosive growth of installment credit, and the growing incidence of retailers committing their receivables to financial institutions. A reduced elasticity of credit's supply, easier credit terms, and competing interpretations of the market's response to changes in credit policy all characterize the post-war period.

The article discusses the cost of consumer credit. Due to consumers' unfamiliarity with credit finance structures, there is a significant amount of confusion and misinformation regarding installment charges. An analysis of finance charges is presented. The critical terms, which determine how charges are calculated are 'constant ratio,' 'actuarial yield,' and 'direct ratio.' A common misconception is that bank charges are lower than finance company charges; they are nearly identical. Both those extending the lines of credit and the consumers using the credit are not adequately informed of their costs.

The article presents criticism and commentary on the reports "Economic Rationale of the Uniform Consumer Credit Code," by Robert W. Johnson and "Unconscionable Conduct and the Uniform Consumer Credit Code," by Allison Dunham, both included within the issue addressing the economic and social-moral conceptual bases of the proposed Uniform Consumer Credit Code of the U.S. in the late 1960s. The conclusions of the reports are challenged, suggesting that competition should be market centered rather than legislatively mandated.

The article discusses the increased cooperation between commercial banks and finance companies in regard to consumer credit. The article notes that the method for financing consumer instalment credit began before World War II, but has every prospect of being expanded in the coming years. The article describes the past dependence of finance companies on bank credit, the traditional relationship between the two, recent developments relative to volume discounts and special reserve provisions, and the implications of these arrangements on the institutional structure.

The article discusses the operating features of U.S. consumer finance companies in the 1950's. Consumer finance companies are lending institutions engaged in money retailing and budget counseling services. Their operating costs and rates of charge have been the highest all of major consumer borrowing agencies. They are just second to commercial banks as the most important source of consumer installment loans. Consumer finance companies are specialized, mass finance agencies differing with regard to risk assumed or capital accepted.

The article reports on the growing popularity and dangers of consumer credit, specifically lower income families which become indebted. The business of the family has seen the growth of credit unions, personal loan departments in banks, and personal finance companies.The author states that selling on credit became a result of rising levels of production. The troubles of debt are described. Potential solutions include increased consumer education and improved regulation of the process by which credit is extended.

The article considers the success of the U.S. consumer finance industry post World War II. The article presents an analysis of the composite earnings record of the principle units within that industry, compares this with the composite record of the major industrial enterprises, and presents a comparison with primary industries in manufacturing and trade industries. Among the conclusions, the article finds that the profitability of the consumer finance industry declined in the postwar period; the earnings decline in that industry was slightly less than in trade or manufacturing; and the composite return was more stable than for the other 33 industrial groups examined and growth was pronounced.

This article examines the effect of regulation, population characteristics and competition on the market for personal cash loans. The author states that because provisions in consumer finance legislation do not behave independently it seems to be logical to study how consumers are impacted by these multi-faceted regulations. Specifically, the author is interested in examining provisions made on small-loan legislation and how they impact the amount of small-loan service. The author applies a multiple regression analysis to a cross-section of data to examine the relationships between regulatory, demographic and competitive factors with the amount of loan service offered by small-loan companies.

The article presents criticism and commentary on the reports "Economic Rationale of the Uniform Consumer Credit Code," by Robert W. Johnson and "Unconscionable Conduct and the Uniform Consumer Credit Code," by Allison Dunham, both included within the issue addressing the economic and social-moral conceptual bases of the proposed Uniform Consumer Credit Code of the U.S. in the late 1960s. The usefulness of the code on increasing competition within the credit market is reasserted and additional suggestions are offered regarding the levels of federal regulation needed in such credit regulations.

There has grown up in the U.S., a new group of consumer financing enterprises, which are of vital concern to the social worker. These enterprises have arisen in response to a change in the national economy. More than any other type of consumer credit, the personal finance "industry" as it is called, finds itself in close relationship with the social worker. The personal financing agency aims quite as directly at the repayment of its loan, together with the charges authorized by the state. Both the business and the welfare agencies deal with a group of people on the same economic level-mainly urban families in temporary financial distress by reason of ill health, unemployment, pressure of debt, or inadequate management families whose meager resources make them ineligible to bank credit. The increasing recognition of the significance of personal financing business, to social work is doubtless responsible for the growing mutual understanding and cooperation between the urban social agencies and personal financing concerns.

Two abstracts are presented for articles pertaining to the governmental and regulatory aspects of marketing. The first is "Credit Legislation and the Proposed Uniform Consumer Credit Code," by Ira M. Millstein. The second is "Economic Report on Installment Credit and Retail Sales Practices of District of Columbia Retailers," by the United States Federal Trade Commission.