A professor at the University of Chicago's Booth School of Business, John Cochrane, has a blog post up about a paper about 19th-century usury laws limiting the interest rates that could be charged by lenders. Professor Cochrane writes:
Here are just a few of the fun facts.
- Tighter usury laws led to less credit. People didn't easily get around them.
- Tighter usury laws led to slower growth. A one percentage point lower rate ceiling translates in to 4-6% less economic growth over the next decade.
- Usury laws only affect the growth of small firms. Big firms do fine.