The reality of payday loans - stigma, spiraling debt and strained relationships - highlighted in new research
It is estimated that more than three quarters of people in the UK have some kind of debt, highlighting both the prevalence of borrowing and the need for better understanding of the impact of loans.
Now, Solent University, Southampton is working with Durham University Business School and Newcastle University on a project looking into the stigma experienced by users of payday loans, calling for better regulation in the credit industry.
This team-based research, led collaboratively by Dr Chrysostomos Apostolidis, Dr Jane Brown and Professor Jillian Farquhar, uses first-hand accounts and interviews to understand how stigma undermines the wellbeing of borrowers as well as those closest to them.
Researchers have identified three main effects of payday loans: spiraling debt; strained relationships with friends and family; and, in some instances, positive experiences which give borrowers a better sense of control over their finances and wellbeing.
Solent’s Professor of Management Research, Jillian Farquhar says:
“This research shows how stigma not only affects the borrowers themselves but others such as family and friends. This can cause serious mental, emotional and social effects and by understanding this ‘spillover’, our research offers important new insight into how policy can be reframed.”
Working in partnership to highlight the stigma attached to payday loans and the implications of that on users and those closest to them, researchers are calling for better regulation in the credit industry to protect people in financial difficulty alongside enhanced awareness and education of borrowing to increase financial literacy.
Find out more about research at Solent here.
