The purpose of this paper is twofold: to examine the plight of a particular segment of the poor – the working poor – in the USA relative to their exclusion from traditional financial markets and their patronage of the payday loan market; and to propose a framework that offers guidance to law makers in making laws/crafting policies that help the working poor gain better access to credit.
This is a conceptual paper that reviews the literature on the payday loan market and uses its findings to propose a strategy to ameliorate the plight of the working poor.
The study integrates the findings of studies on the payday loan market with theories of corporate social responsibility. Using these findings the authors develop a framework that can guide policy makers in making policies that address the exclusion of the working poor from financial markets.
As a conceptual paper based on theories, the study does not provide empirical validation. The paper develops a framework that could guide policy makers as they consider legislation to address the financial exclusion of the poor, particularly with regard to payday loans.
The paper proposes a policy framework to solve the “debt treadmill” problems of the working poor.
The consequent improvement of the financial conditions of the working poor improves society in general.
To the best of the knowledge, this is the first marketing paper that has proposed a structural framework to address the exclusion of the working poor from the credit markets.
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