Eric Lum

A payday loan is a form of credit in which a loan is granted and must be repaid by the borrower by the due date (Government of Ontario). A fee must be paid upon borrowing a loan and further interest fees are applied if the borrower cannot repay the loan. Thus, payday loans can be a very costly form of credit if finances are not managed carefully. Payday lenders are considered an alternative financial service (AFS) and provide an additional money lending option in the financial industry. In order to stay successful, payday loan agencies must differentiate themselves from banks. Using various spatial techniques, this study examines the spatial location patterns of payday loan agencies and banks in Toronto, as well as the demographic composition of its population. Location data are analyzed to compare local and global patterns across the city for both types of financial institutions while census data are used to see the characteristics of the populations they are locating near.

Keywords: Payday loan, bank, geodemographics, spatial analysis, GIS, Toronto