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Consequences of Credit Market Exclusion
Analyze the potential economic consequences for an individual who is completely unable to borrow money on any terms. In your response, contrast these consequences with those faced by an individual who is able to borrow, but only in limited amounts or at very high interest rates.
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Social Science
Empirical Science
Science
CORE Econ
Economics
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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Assessing Credit Market Access
Which of the following scenarios best illustrates the situation of an individual who is completely unable to access credit on any terms?
A person with very little wealth who is unable to get a loan on any terms is considered 'credit market excluded'. This situation arises primarily because lenders assume such an individual is fundamentally unwilling to repay, rather than because the lender calculates a high risk of the individual being unable to repay.
Lender's Rationale for Credit Exclusion
Consequences of Credit Market Exclusion
Match each individual's situation with the correct term describing their access to borrowing.
Impact of a Policy on Credit Market Access
A lender is evaluating a loan application from an individual who has no savings, property, or other assets that could be used as security. From the lender's perspective, why is this individual most likely to be completely denied a loan, rather than simply being offered one at a high interest rate?
Evaluating a Policy to Address Credit Exclusion
An individual who is offered a loan but at an interest rate so high that they cannot afford the repayments is considered 'credit market excluded'.
Correlation Between Poverty and Credit Limitations
Credit Constraints and the Employment Path for the Less Wealthy