Interest, Usury and the Common Good

This article examines longstanding moral and practical debates surrounding the charging of interest and the concept of usury. Tracing the evolution of attitudes from ancient prohibitions to modern acceptance, the authors distinguish between reasonable interest and usurious rates, focusing on the moral implications of exploiting borrowers through excessive charges. The paper defends the legitimacy of charging interest in commercial transactions and for macroeconomic policy, emphasising the economic rationale rooted in time preference, opportunity cost, risk and inflation. Furthermore, it argues that legislated interest rate caps, while well-intentioned, often harm the very individuals they aim to protect by excluding high-risk, low-income borrowers from formal credit markets and pushing them toward unregulated lenders. The authors advocate for alternative solutions such as micro-credit and enhanced income support to address financial exclusion, highlighting the need for commercial practices that reinforce, rather than undermine, social cohesion and the common good.