Loan sharks charging interest rates of up to 400 per cent per annum are exploiting Maori, Pacific and low income New Zealanders, Otago University researchers say.

The study by the university's health promotion and policy research unit in Wellington says the impact of loan sharks in low income suburbs of South Auckland and other cities is affecting the health and well-being of New Zealanders.

"Loan sharks target and thrive in low income communities because consumers are borrowing for everyday needs," says lead researcher Associate Professor Louise Signal.

The study recommends tighter regulation of loan sharks, including a cap on interest rates at 48 per cent per annum, and introduction of responsible lending requirements.

The study also says more work needs to be done to inform vulnerable communities about financial literacy and the risks involved with loan sharks and borrowing.