Do banks cause poverty?

Poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence. Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks, and only when savers can deposit their money in reliable banks can it be channelled from the idle rich to the industrious poor. This point applies not just to the poor countries of the world. It can also be said of the poorest neighborhoods in supposedly developed countries.

Behind every loan shark, there lurks an implicit threat.

Poverty is seldom directly attributable to the antics of rapacious financiers. It often has more to do with the lack of financial institutions, with the absence of banks, not their presence. It is only when borrowers have access to efficient credit networks that they can escape from the clutches of the loan sharks; only when savers can put their money in reliable banks that it can be channelled from the idle to the industrious.