Empirical evidence suggests that usury laws
A) help poor consumers by lowering the interest rate they pay.
B) hurt poor consumers by limiting their ability to borrow.
C) keep interest rates low.
D) limit the amount borrowed by wealthier consumers.

Question

Quizplus · Accepted Answer

Usury laws typically set a maximum interest rate that can be charged on loans. While this may initially seem like a helpful measure to protect consumers, it can actually hurt poor consumers by limiting their ability to borrow. This is because lenders may be less willing to lend to high-risk borrowers, such as those with low credit scores or limited income, if they are unable to charge higher interest rates to offset the risk of default. As a result, poor consumers may be unable to access credit when they need it most.

Empirical Evidence Suggests That Usury Laws