H O W A N E C O N O M Y G R O W S A N D W H Y I T C R A S H E S
68
Naturally, with his ability to specialize in the tasks associated
with effi cient and profi table lending, Max became the island’s
foremost expert on fi sh
economics. And whereas less
specialized lenders tended
to be infl uenced by factors
such as personal history,
family relationship, and
emotion, with Goodbank,
it all boiled down to
dollars and cents, or
rather fi ns and scales.
Interest Rates
With his personal well-being so intertwined with the
success of the bank, Max was in the ideal position to
determine the best interest rates to pay depositors and to
charge borrowers.
On the lending side, he offered the lowest
interest rate to the most secure borrowers (those
with the highest ability to repay the
loans). For dicier
borrowers he
charged a
higher rate
to compensate
for the added risk.
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