EBK ECONOMICS OF MONEY, BANKING AND FIN
11th Edition
ISBN: 8220101336934
Author: Mishkin
Publisher: PEARSON
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Question
Chapter 2, Problem 1Q
To determine
The result of availing the loan facility from a loan shark and whether the loan sharking can be legalized.
Expert Solution & Answer
Explanation of Solution
No, he should not take the loan from a loan shark because there may be a cost-benefit hidden behind the loan but non-monetary expenses that may be incurred after taking the loan from a loan shark is very huge. A loan shark reimburses the loans illegally without having any authority of providing the loans to the general public. Taking a loan from a loan shark involves a high degree of risk and a very high rate of interest upon the loan.
Loan sharking cannot be legalized because they charge very high-interest rates upon the loans reimbursed and the government shall not allow them to do so keeping in mind their acts of violence and the poor population of the country. The results of availing of this loan facility will be very adverse and there may be a risk upon the person’s life.
Economics Concept Introduction
Introduction: A loan shark is an individual or body who offers credits at high loan fees without holding significant approval from the money-related controller. Generally, the rate of interest charged by them is very high than the commercial loan interest rates.
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Chapter 2 Solutions
EBK ECONOMICS OF MONEY, BANKING AND FIN
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