<p>Because of the recession some members of the household may have lost their jobs. So maybe they don't have enough money to pay a utility bill? To pay for urgent repairs? To buy a Christmas present? There are a variety of possible reasons.</p>

CC BY-SA 3.0
2016-11-29T09:26:04.903Z
2016-11-29T09:26:04.903Z
Giskard
<p>I've noticed that certificates of deposit have dropped their interest rates in my country. This seems to be due to lack of trust in economic opportunities and has caused an increase of liquidity in banks that has not been able to be released via loans.</p>

<p>This leads me to think that loans will be favored, although interests rates for them are actually high due (I suppose) to an inherent risk in the local economy and therefore the typical loan is small ($\sim 3000 $ $). So, what are the typical purposes --other than immediate consumption-- that these type of loans have for <em>households</em> (i.e. not for starting a new business) as a whole?</p>

<p>Let me rephrase my question: what incentive would there be for families to borrow during a recession?</p>

<microeconomics>
Uses of loans during recession
crimson_sprite
# Uses of loans during recession

(Asked by: username_0 on 2016-11-29)

I've noticed that certificates of deposit have dropped their interest rates in my country. This seems to be due to lack of trust in economic opportunities and has caused an increase of liquidity in banks that has not been able to be released via loans.

This leads me to think that loans will be favored, although interests rates for them are actually high due (I suppose) to an inherent risk in the local economy and therefore the typical loan is small ($\sim 3000 $ $). So, what are the typical purposes --other than immediate consumption-- that these type of loans have for *households* (i.e. not for starting a new business) as a whole?

Let me rephrase my question: what incentive would there be for families to borrow during a recession?

**Tags:** microeconomics

---

## 1 answers

### Answer by username_1 on 2016-11-29. Score: 1 | Accepted answer

Because of the recession some members of the household may have lost their jobs. So maybe they don't have enough money to pay a utility bill? To pay for urgent repairs? To buy a Christmas present? There are a variety of possible reasons.


---

