Coco, Giuseppe and de Meza, David 
ORCID: 0000-0002-5638-8310
(2009)
In defense of usury laws.
Journal of Money, Credit and Banking, 41 (8).
pp. 1691-1703.
ISSN 0022-2879
Identification Number: 10.1111/j.1538-4616.2009.00274.x
Abstract
Usury law is often criticized by economists for curtailing lending and thus creating deadweight costs. This paper shows that if moral hazard leads to credit rationing, a just-binding usury law creates a deadweight gain. This property also holds in most market-clearing equilibria. Independent of social insurance benefits, or curbing present-biased preferences, interest rate caps have merit.
| Item Type: | Article |
|---|---|
| Official URL: | http://onlinelibrary.wiley.com/journal/10.1111/(IS... |
| Additional Information: | © 2009 The Ohio State University |
| Divisions: | Management |
| Subjects: | H Social Sciences > HB Economic Theory |
| Date Deposited: | 10 May 2011 15:48 |
| Last Modified: | 01 Oct 2024 03:36 |
| URI: | http://eprints.lse.ac.uk/id/eprint/36071 |
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