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Just speculating here - I wonder if turnover is better at libraries which allow fewer checkouts. If the library allowed 20 checkouts, maybe people would check out a lot of books all at once and end up keeping many of them for the full 14 or 21 days.
With only 4 checkouts allowed, I usually check out only 3 books at a time (leaving a space open in case a hold comes through), so I usually get through them pretty quickly and return them early, therefore not tying up a lot of to-be-read books that may be on other people's hold lists.
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