Simultaneous borrowing restrictions are divided in to two factors: the limitation on absolute amount of loans, while the limitation for the true amount of loans per loan provider. Both of these are collapsed into binary variables in regression analysis. These factors make the worth 1 in the event that state limits clients to 1 loan at the same time, and 0 otherwise. Which means states limiting clients to a couple of loans at the same time are believed equal to states without any limitation. This decision ended up being built in light associated with the proven fact that in states without any restriction it really is unusual to borrow significantly more than two loans at any given time; consequently, a restriction of two loans is not likely to be binding on numerous customers.
For states when the rollover restriction is stated in days in the place of in the quantity of renewals, 14 days is recognized as comparable to 1 renewal. In regression analysis the rollover variable is collapsed in to a binary equal to 1 if rollovers are totally forbidden, and 0 if some kind of rollover is permitted (regardless of if it entails area of the principle become paid off). Remember that a definition that is alternate considering paydown-only rollovers as equal to rollover prohibitions, yields empirical outcomes very similar to the outcomes presented into the paper.