How an Economy Grows and Why It Crashes

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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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