Problem
High interest rates
Other Names:
Exorbitant interest ratesStructural usury
Prohibitive cost of money
Exorbitant debt interest
Deepening debt cycle
Nature:
Relatively high interest rates slows borrowing, stagnates business and creates hardships on individual borrowers. Economic policies in the industrial countries determine interest rates worldwide.
Incidence:
High real interest rates are adding significantly to structural budget deficits in both developed and developing countries.
[Developing countries] In the agricultural regions which form the major part of developing countries, agricultural credit to farmers is supplied mainly by local money-lenders and traders. Exorbitant rates of interest, amounting to barely disguised usury, are charged. In addition, the lender is usually in a position to apply, or to threaten, a wide variety of sanctions which, although usually intangible, may maintain the borrower in a situation bordering on servitude, since it may be very difficult for him to pay off his accumulated debts. The lender is often also the local commodities broker-speculator.
Broader Problems:
Payment of interestInstability of the world economy Aggravates:
Bad loansMonopoliesExcessive costsHousing shortageInadequate savingsBusiness bankruptcyAbandoned private homesLack of capital developmentIncomplete cost projectionsDecline in public sector savingsProhibitive costs for businessesUnnecessary personal consumptionProhibitive cost of cooperative start-upSubsistence approach to capital resourcesDiminishing capital investment in small communitiesIrregular payments of international financial obligationsFluctuations in real value of money Strategies:
Charging interestReducing cost of moneyProviding moneyMaking cheaper moneyIncreasing interest rates References:
Mark, Jeffrey: An Analysis of UsuryNelson, Benjamin: The Idea of Usury: from tribal brotherhood to universal otherhood Subject(s):
Commerce → CreditCommerce → Finance
Commerce → Money
Commerce → Purchasing, supplying
Industry → Construction
Society → Communities
Related UN Sustainable Development Goals:
Problem Type:
F: Fuzzy exceptional problems Date of last update
16.10.2021 – 11:02 CEST