What is owed between lender and borrower, and what may a loan cost?
Lending lets households buy, farmers plant and firms build before the money is earned. What does a lender owe the borrower, and when does the price of a loan become a wrong?
The picture
What the numbers show, read from the Data library each time the page opens.
How to read the chart above, and the words it uses.
How to read the data
The figure is the money that banks and other financial bodies have lent to households and firms, set against the size of the economy. A high figure shows how much is borrowed, not on what terms or how well it is used.
Key terms
Credit
Money lent, to be paid back, usually with interest.
Interest
The price paid for the use of borrowed money, usually a rate on the sum borrowed.
Usury
In the tradition, a charge for a loan beyond what was lent; today often used for charging an excessive rate.
Who has a stake
Each interest, then readings from the Catholic library and the Classics library that bear on it, oldest first. Choose a group to read.
To obtain what they need without being crushed by the cost, and not to be taken advantage of because they cannot go elsewhere.
To be repaid what they lent, and to be recognised for the risk they carry and the use of their money they give up.
To be able to borrow in order to trade, build and hire, on terms that the work can bear.
That lending serves the common good and that money does not come to rule the household and the town.
For discussion
If a lender gives up the use of money and runs a risk of loss, what return is just, and where does a fair price shade into taking advantage of a need?
Bacon saw both goods and harms in lending at interest. How should a community weigh the enterprise that borrowing makes possible against the strain it puts on those who borrow from need?
Aquinas and Aristotle held that money does not by itself produce more money. What in today’s lending would they ask us to look at, and what might they have under-weighted?
