Credit Culture and Interest Rates Feed Each Other.
Many people blame African borrowers for the credit problem, saying they do not repay and so banks cannot lend. That claim deserves a closer look, because the interest rate and the credit culture are tangled together. When a business loan costs several times what a government security pays, only the most desperate or the most risky borrowers are willing to accept it. Sensible borrowers walk away.
Because of this, the pool of people taking loans gets worse, defaults rise, and banks feel proven right. They then raise rates again or retreat further into government securities. Instead of a healthy cycle where good borrowers build track records, you get a vicious cycle where expensive credit produces bad credit, which produces even more expensive credit.
That is why blaming culture alone misses the point. Culture matters, but so does the price of money and the alternatives available to the lender. Change the incentive, and behaviour on both sides of the loan desk starts to change with it.
The same principle applies to your own money. The environment you operate in shapes your results, so choose it carefully and stay close to people who understand it. To grow your capital alongside an experienced master trader, copy my trades here: https://www.binance.com/en/copy-trading/lead-details/5293024773212277505?timeRange=365D
Disclaimer: This post is for educational purposes only and is not financial advice. Crypto trading involves risk, including the loss of capital. Always do your own research.
#CreditCulture #interestrates #Economics #Africa #Copytrading
$BNB $BTC
Many people blame African borrowers for the credit problem, saying they do not repay and so banks cannot lend. That claim deserves a closer look, because the interest rate and the credit culture are tangled together. When a business loan costs several times what a government security pays, only the most desperate or the most risky borrowers are willing to accept it. Sensible borrowers walk away.
Because of this, the pool of people taking loans gets worse, defaults rise, and banks feel proven right. They then raise rates again or retreat further into government securities. Instead of a healthy cycle where good borrowers build track records, you get a vicious cycle where expensive credit produces bad credit, which produces even more expensive credit.
That is why blaming culture alone misses the point. Culture matters, but so does the price of money and the alternatives available to the lender. Change the incentive, and behaviour on both sides of the loan desk starts to change with it.
The same principle applies to your own money. The environment you operate in shapes your results, so choose it carefully and stay close to people who understand it. To grow your capital alongside an experienced master trader, copy my trades here: https://www.binance.com/en/copy-trading/lead-details/5293024773212277505?timeRange=365D
Disclaimer: This post is for educational purposes only and is not financial advice. Crypto trading involves risk, including the loss of capital. Always do your own research.
#CreditCulture #interestrates #Economics #Africa #Copytrading
$BNB $BTC