Author ORCID Identifier

Stephanie Ben-Ishai: 0000-0001-6587-8971

Document Type

Book Review

Publication Date

3-2017

Source Publication

Canadian Business Law Journal, vol. 59, no. 1, March 2017, pp. 119-132.

Abstract

In her bold and timely new book, Professor Baradaran brings an American perspective, supported by detailed empirical data and historical analysis, to bear on how to solve the problem of financial exclusion. She begins by situating her analysis in the context of the important relationship between banks and governments. A social contract has existed between banks and government since the earliest days of the Republic. The government supports banks through trust-inducing insurance, bailouts, liquidity protection, and a framework that allows for the allocation of credit to the entire economy. Banks support government by operating the central machinery of the economy by providing loans, acting as a medium for trade, and providing transaction services. Through this social contract, the two are co-dependent. This entanglement and social contract surely means that banks should not exclude a large subset of the population. If government is "for the people" than banking services must also be "for the people." However, Professor Baradaran highlights that many Americans are "unbanked" or must use fringe lenders to access credit. Both the unbanked and fringe lending borrowers pay high interest rates and/or user fees in order to access their money.

Comments

Reproduced by permission of Thomson Reuters Canada Limited.

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