Question

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What is usury? Why were Medieval and Greek philosophers and scholars opposed to it?

Answer 1

          Generally, usury known in simple terms as exploitative or we can say abusive interest rates in the informal sector monetary loans. These kind of loans are approved against without any documentation and collateral securities are like land, houses, agricultural land, gold and etc.

          Usually the lender in informal sector charges unreasonably high interest rates for the money or things lend, the lender always tries to maximize the profit for his owned money and tries to took advantages of the need of the borrower.

          In the formal monetary systems for ex. Banking system the lending rates are generally 4-12 %, but in the informal sector it was not 4-12%, but it was around 24-48%. It looks like exploitative or abusive interest rates. If we compare the interest rates on the monthly basis, suppose 12% are charged by banks for lending for annually it becomes 1% for a month. And if we consider in informal sector the lending rates are 36% annually, and it becomes 3% for a month.

          The private lenders are taking high risk for the sound huge profit, the interest rates are fixed by their own and privately and illegally. The rich were in the position of taking advantage of the situation became the moneylenders. It was evident that the usury means the exploitation of the poor. So, the Greek philosophers and scholars of the medieval age are opposing this system.