MC Business Faculty Member Discusses Effects of Interest Rate Cap at National Economic Policy Conference

Brandon Bolen, assistant professor of economics in MC Business, discussed “Credit for Me But Not for Thee: The Effects of the Illinois Rate Cap,” at the George G. Kaufman Center for Financial Policy Studies' 2023 Policy Conference.

One of the nation’s leading financial services think tanks selected a faculty member in the Mississippi College School of Business to share his research findings at its annual policy conference last weekend.

Brandon Bolen, assistant professor of economics in MC Business, joined Thomas W. Miller, professor of finance and Jack R. Lee Chair of Financial Institutions and Consumer Finance at Mississippi State University, to discuss “Credit for Me But Not for Thee: The Effects of the Illinois Rate Cap,” at the second George G. Kaufman Center for Financial Policy Studies at the Quinlan School of Business of Loyola University Chicago’s 2023 Policy Conference Nov. 29. The late Gregory Elliehausen, a member of the Federal Reserve System’s Board of Governors, was a coauthor of the paper.

The conference brought together researchers, policymakers, and financial industry executives to review and discuss relevant policy issues affecting the financial services sector. It examined “Recent Turmoil in Banking Markets: Evidence, Causes, Regulatory Response, Lessons, and Future Needs” and featured keynote presentations by Sheila Bair, former chair of the Federal Deposit Insurance Corporation, and Loretta Mester, president and CEO of the Federal Reserve Bank of Cleveland.

The research and policy presentations examined recent turmoil in banking markets, issues associated with accessing credit, and topics related to the research efforts of the late Dr. George G. Kaufman in bank regulatory reform, monetary policy, and financial services regulations imposed to achieve social goals.

Bolen said he shared his findings with policymakers and other academics who create and study public policy associated with the financial services industry.

“I hope our findings will inform policymakers of the effects of interest-rate caps and inform future policy decisions,” said Bolen, who received MC’s Young Professor of the Year Award in 2020. “Mississippi College plays an important role in our community. It is our responsibility as faculty members to share our expertise to help our communities flourish.

“Opportunities to conduct meaningful academic research and share that research in conferences like this one are a big part of how we live out that responsibility.”

The Kaufman Center is named for one of the world’s leading experts on banking, a prolific researcher, and a highly regarded John F. Smith Professor of Economics and Finance at Loyola University Chicago. The center contributes to the debate on current financial services policy issues and builds on Kaufman’s work to understand the role of the banking and financial sector in promoting economic growth and financial stability.

Research and policy presentations at the conference covered three areas: issues associated with the recent turmoil in the banking markets, issues related to the mortgage loan search process, and topics emphasizing Kaufman’s research efforts on bank regulatory reform, the effectiveness of monetary policy, unanticipated consequences of regulatory policies, and the effectiveness of regulations imposed to achieve specific goals in the financial services industry.

Bolen joined discussants, panelists, and authors from a host of financial services disciplines around the world, including the National University of Singapore, the Federal Reserve Bank of Chicago, Ohio State University, DePaul University, Columbia University, the Federal Reserve Bank of Cleveland, Texas Christian University, the Federal Reserve Bank of Atlanta, Yale University, and many other institutions.

“Doug Evanoff, executive director of the Kaufman Center, was made aware of my recent research with Gregory Elliehausen and Tom Miller and invited us to participate in the conference to share our findings,” said Bolen, who had not attended the conference before. “I presented our research findings on behalf of our team at the conference.”

The trio’s paper has recently been accepted for publication in “Public Choice,” a peer-reviewed academic journal. The research centers on the state of Illinois’ 36-percent APR interest-rate cap passed in March 2021.

“Our research finds that subprime borrowers – those with credit scores below 600 – lost access to credit because of the interest-rate cap,” Bolen said. “Specifically, sub-prime borrowers lost access to a credit product called an unsecured installment loan or personal finance loan, but it is reasonable to assume they also lost access to other small-dollar, short-term credit products.

“At the same time, prime borrowers – those with credit scores above 650 who likely have an abundance of alternative credit options – gained additional access to more unsecured installment loan credit. In survey responses, sub-prime borrowers reported that their financial well-being worsened as a result of losing credit access.”

Bolen and his partners’ research has also been considered by both the Illinois General Assembly and the South Carolina Legislature as they consider financial policy. Miller even testified before the South Carolina legislature.

A former standout point guard at Madison Ridgeland Academy, Bolen played four seasons on the Mississippi State University basketball team. He received his B.B.A., M.A., and Ph.D. from MSU. He joined the Mississippi College faculty in 2018 and serves as a mentor to the MC hoops squad. The Madison native and Ridgeland resident serves on the Christian University’s Faculty Senate, the Student Activities Committee, and the School of Business Faith and Service Committee.

A board member and volunteer coach with the Madison Ridgeland Youth Club, he trains high school economics teachers to receive their certification and become “master teachers” with the Mississippi Council on Economic Education in Jackson. He, his wife, Nicole, and their three children attend Grace Community Church in Jackson.

The Kaufman Center’s objectives are to bring nationally recognized experts in banking and financial services from the academic, practitioner, and policy-making communities together to interact with students and faculty and to sponsor symposiums for faculty, students, the banking community, and the general public; to improve the quality of courses on banking and financial services; to promote research in banking and financial services; and to provide a mechanism for fostering interaction between students, faculty, and the Illinois banking community.

Bolen said it is important for Mississippi College to maintain a voice in this effort.

“Our surrounding communities know that Mississippi College is an excellent academic institution with talented students,” he said. “Participating in events like these helps increase awareness of the quality of our institution and our students.”