Why Money Lenders Play An Important Role In The Economy

What is money lending?

The act of giving money to someone with an anticipation to get the money back in the future, which might involve keeping a security deposit, coupled with the interest, as a lump sum or in some instalments is called money lending.

For example, present day bank loans.

Who are money lenders?

The people who lend money to earn interest on the money lent, and who may keep some security deposit before lending the money to ensure that they get their money back, are called money lenders. In short, the people who do the business of money lending are said to be money lenders.

Money lenders have been proven to help economy build in the following ways:

1.   For Economic Stabilisation

As interest rates are controlled by government or governing authorities, they tend to do calculative study to use interest rates to stabilise inflation and deflation.

During inflation, the prices of goods and services increase thus, increasing the money flow in the economy. To handle this, the government increases the interest rates to decrease the money supply. And during deflation, they decrease the interest rates to increase the money flow.

2.   Consumer Loans

Every citizen of the country is a consumer. Majority of the population being middle-class in the country, people tend to not purchase goods if there aren’t consumer loans since they can’t afford paying in a single go. The existence of loans has made people lure to purchase goods they can’t afford and thereby increasing the demand of goods and services, which results in increase of the Gdp

3.   Startups

Most Startups can never go live because they don’t have enough capital to start. Lending has played a great role in the rise of startups by giving them loans so that they can start their business now by investing the loan amount as capital and repaying later to the bank in instalments. This has raised the production of goods and services, ultimately raising the Gdp of the country.


Not every person is rich enough to afford everything. Everyone at the initial stage has to gather some capital to raise their business. Taking out a loan is the first step to grow. Now the question is where to take the loan from? Don’t worry we got your back. Click on the link to get to the best money lender in toa payoh.