Introduction: the moral environment

Lending and borrowing are so pervasive in modern life that it is hard to imagine it without them. Everyone who has a bank deposit or savings account is in effect lending money to the bank. Everyone who has an overdraft, a credit card, a mortgage or a personal loan, or has bought a car or electrical appliance on a finance package, is a borrower and debtor. Almost all governments are heavily in debt, relying on bond issues to make ends meet, and so are many companies.

Social attitudes to borrowing and debt are quite complex and shift with the context and with the times. On the one hand, there is a perception that borrowing is often necessary, especially for the poor or for craftsmen, traders and small businesses having to bridge the gap between paying for supplies and being paid, often very belatedly, for their goods and services. When the borrowing is used to finance the development of business or the purchase of a home (especially if the borrower has saved up for a deposit first), it might even be seen as virtuous: a voluntary submission to the discipline of repayment in order to contribute to wealth creation or look after one’s family. In recent years this attitude has found expression in the state encouragement of student indebtedness (see Box 5.1) and in the idea, invoked both in the context of microfinance and in debates on mortgage availability, that people have a moral human right to credit and that not lending to people who wish to borrow is a form of discrimination.