Iron Law of Interest Rate Restrictions: The Rationing Behavior of Financial Institutions Matters

摘要

Formal financial institutions (FFI) in low-income nations, legally bound to provide to high-risk small farmers loans regulated by restricted interest rates (RIR), mitigate risks by rationing loans to wealthier farmers, thus worsening income distribution in rural areas. So argues the author of this paper examining the impact of RIR's on borrowers and especially on lenders in low-income countries.