The UK needs a "capital injection" to tackle the reliance on payday loans, a think tank has said.
Mat Lawrence, one of the report's authors, said the payday loan industry had grown "in large part" to lend to households High Street banks had been unwilling to give credit to.
The payday lending industry has grown in large part because of a gap in the credit market that mainstream banks are unwilling to fill.
Regulation can reduce the harm done by payday lenders but it alone cannot ensure that the public interest is properly served in the provision of affordable credit.
Britain needs an initial capital injection to expand the provision of affordable credit and new 'match saving' incentives for people on low incomes to enable people to build up a stronger asset base of their own and reduce their reliance on credit.
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