What happens when governments ban microloans to the poor or heavily regulate interest rates?

Dan Gaidula

  • When governments ban microloans to the poor or heavily regulate interest rates this only deprives the poor of access to capital that could help them live better lives and drives them into the hands of the local moneylenders whose interest rates can run into the thousands.
  • Loan sharks use brutal techniques to collect on delinquent loans and confiscate meager property.
  • These local moneylenders are often the same government bureaucrat who is outlawing the competition.
  • Slum landlords in many cities are actually bureaucrats who build shanties and rent them out to the poor. Property rights and microlending give the poor weapons to use against these corrupt bureaucrats who are often trying to kill any legislature that would impinge on their side businesses.