Briefly assess the equity of informal credit markets

Reference no: EM131916069

Problem

1. If being a moneylender is as profitable as many observers claim it is, give two reasons why moneylenders in low-income countries do not appear to operate in a competitive environment.

2. Moneylenders are known to charge exceedingly high interest rates.

a. Provide three alternative explanations as to why this might be the case.

b. Briefly assess the efficiency and equity of informal credit markets in light of your explanations.

Reference no: EM131916069

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