A major purpose of usury laws is to make more funds available to low-income borrowers. Economic analysis suggests that usury laws

Question

Quizplus · Accepted Answer

Usury laws, which set a maximum interest rate on loans, can unintentionally make it less attractive for lenders to offer loans to high-risk (often low-income) borrowers. As a result, lenders may prefer to allocate their funds to low-risk (often high-income) borrowers who are seen as more likely to repay, even at lower interest rates. This can lead to a situation where available funds are disproportionately allocated to high-income borrowers, contrary to the intended goal of helping low-income individuals access credit.

A Major Purpose of Usury Laws Is to Make More