Authors: Rajashri Chakrabarti, Daniel Garcia, Donald P. Morgan, and Lee Seltzer
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Staff Reports
Less for You, More for Me: Credit Reallocation and Rationing Under Usury Limits
Number 1173
December 2025
December 2025
JEL classification: G28, G50, G51
Many states have capped consumer loan interest rates to protect households from high-cost lenders. Using triple-difference and event study analysis, we investigate how these usury limits affect the availability and allocation of credit across households. Consistent with standard price theory, we find that credit to the riskiest borrowers contracts under usury limits without improving delinquencies. More surprisingly, credit to lower risk borrowers expands under usury limits. This reallocation suggests that usury limits have unintended effects that are not entirely explained by standard theory.
Author Disclosure Statement(s)
Rajashri Chakrabarti
Rajashri Chakrabarti declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Daniel Garcia
Daniel Garcia declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Donald Morgan
Donald Morgan declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Lee Seltzer
Lee Seltzer declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Rajashri Chakrabarti declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Daniel Garcia
Daniel Garcia declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Donald Morgan
Donald Morgan declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Lee Seltzer
Lee Seltzer declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Suggested Citation:
Chakrabarti, Rajashri, Daniel Garcia, Donald Morgan, and Lee Seltzer. 2025. “Less for You, More for Me: Credit Reallocation and Rationing Under Usury Limits.” Federal Reserve Bank of New York Staff Reports, no. 1173, December. https://doi.org/10.59576/sr.1173
Chakrabarti, Rajashri, Daniel Garcia, Donald Morgan, and Lee Seltzer. 2025. “Less for You, More for Me: Credit Reallocation and Rationing Under Usury Limits.” Federal Reserve Bank of New York Staff Reports, no. 1173, December. https://doi.org/10.59576/sr.1173
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