How can you explain the phenomenon

Reference no: EM133659764

Problem: In low-income developing countries an informal financial sector often coexists with a formal one. Interest rates on loans are also often systematically higher in the informal sector than in the formal one. How can you explain this phenomenon? Furthermore, should the government try to impose interest rate ceilings on loans in the informal sector? Explain if and when such a policy would be justified and what would be its effect.

Reference no: EM133659764

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