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Limitations on simultaneous borrowing

Limitations on simultaneous borrowing

Simultaneous borrowing restrictions are divided in to two factors: the restriction on absolute wide range of loans, in addition to limitation regarding the true amount of loans per lender. In regression analysis both these are collapsed into binary variables. These factors make the worth 1 in the event that state limits customers to 1 loan at any given time, and 0 otherwise. This means states restricting clients to a couple of loans at the same time are believed equal to states without any restriction. This decision ended up being produced in light associated with undeniable fact that in states without any limitation it really is unusual to borrow significantly more than two loans at the same time; consequently, a restriction of two loans is not likely to be binding on numerous clients.