Interest rate restrictions are among the most pervasive forms of economic regulations. This paper explains that these restrictions can be explained as a means of primitive social insurance. Interest rate limits are Pareto improving because agents borrow when they have temporary negative income...

The rate of interest has been a highly complex and important phenomenon since long. For this reason, it has entered into all economics and related literature. For instance, though not an economist, Aristotle had a view on it and in fact considered it immoral. His reasoning was very simple:...