DAVIS, Calif. – A new study by the University of California Graduate School of Management questions whether payday loans offered by credit unions are a preferable to traditional payday lenders and whether such credit can be provided profitably.

The study, "Are Credit Unions Viable Providers of Short-term Credit," suggests that severely strapped borrowers may prefer to pay high rates for small, short-term loans than participate in credit union programs that have strings attached such as a savings component or a financial education requirement, like programs offered by credit unions in Pennsylvania and Ohio.

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