Usury regulations focus both on explicit recommendations, such as disclosure statements in lending acts or interest rate caps, and on incentives for the formal banking sector to reach the poor. Considerable attention is also devoted to adequate sanctions for the practice of usury. We propose a theoretical model to investigate where to direct reforms to curb usury. Our primary policy implication is the convenience of polarizing the allocation of public resources in either legal safeguards for formal lenders or sanction enforcement against usurers. Furthermore, we demonstrate that in developing countries such policy interventions may backfire when borrowers' higher wealth implies increasing inequality in its distribution. Therefore, countries undertaking reforms against predatory lending should be aware of their growth path during transition

Crosato, L., Dalla Pellegrina, L. (2019). Safe Credit to the Poor: the Role of Anti-Usury Policies. DEVELOPMENT POLICY REVIEW, 37(3), 423-449 [10.1111/dpr.12370].

Safe Credit to the Poor: the Role of Anti-Usury Policies

Crosato, L
;
Dalla Pellegrina, L
2019

Abstract

Usury regulations focus both on explicit recommendations, such as disclosure statements in lending acts or interest rate caps, and on incentives for the formal banking sector to reach the poor. Considerable attention is also devoted to adequate sanctions for the practice of usury. We propose a theoretical model to investigate where to direct reforms to curb usury. Our primary policy implication is the convenience of polarizing the allocation of public resources in either legal safeguards for formal lenders or sanction enforcement against usurers. Furthermore, we demonstrate that in developing countries such policy interventions may backfire when borrowers' higher wealth implies increasing inequality in its distribution. Therefore, countries undertaking reforms against predatory lending should be aware of their growth path during transition
Articolo in rivista - Articolo scientifico
usury, illegal nancial markets, institutional arrangements, income distribution
English
30-gen-2018
2019
37
3
423
449
reserved
Crosato, L., Dalla Pellegrina, L. (2019). Safe Credit to the Poor: the Role of Anti-Usury Policies. DEVELOPMENT POLICY REVIEW, 37(3), 423-449 [10.1111/dpr.12370].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/182147
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