“Credit is useful as well as harmful, it depends on the risk involved".Support

money-and-credit

#1

“Credit is useful as well as harmful, it depends on the risk involved". Support the statement with examples.


#2

Credit is useful because
(i) It helps to meet the working capital needs of production.
(ii) It helps in setting up new industries or businesses.
But, it is harmful also that depends on the risk involved
(i) Credit pushes the borrower into a debt-trap in the case of high risk.
(ii) Instead of improvement in earnings, the borrower is much worse off than before. For example, farmers have to sell part of land to repay the loan.
From the above points, it can be concluded that credit is useful as well as harmful. It depends on the risk involved.