Consider the fuss that people now make about microcredit — small loans, often at interest rates well above 50 per cent a year that are said to help the very poorest families manage their finances and even become entrepreneurs. That’s a story that many people are happy to accept without examining the evidence, while at the same time condemning payday loans, which appear to be a similar product. Are you sure [that’s] not just reflecting a prejudice that credit-starved Bangladeshis are heroic would-be entrepreneurs while credit-starved westerners must be trailer trash?<\/p>\n
That’s Tim Harford, in a post<\/a> on whether payday lending is wrong.<\/p>\n Each fall, when I teach the students in my development seminar about\u00a0credit rationing<\/a>,\u00a0I tell them “If you think credit rationing is a developing-country phenomenon, think again.” I then encourage them to drive up North Roxboro Street north of I-85 to see how the market responds to failures of the credit market in Durham<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Consider the fuss that people now make about microcredit — small loans, often at interest rates well above 50 per cent a year that are…<\/p>\n