Calvin’s Restrictions on Interest: Guidelines for the Credit Crisis

European Banking Center Discussion Paper No. 2009-22

CentER Discussion Paper Series No. 2009-90

22 Pages Posted: 27 Nov 2009

See all articles by Johan Graafland

Johan Graafland

Tilburg University - Center for Economic Research

Date Written: November 12, 2009

Abstract

Calvin’s view on the legitimacy of interest has had a great impact on the economic development of Western society. Although Calvin took a fundamentally positive attitude to interest, he also proposed several restrictions on the charging of interest. In this article, we investigate the relevance of these restrictions to the current credit crisis. We find that each of them provides a relevant interpretation of what went wrong in the build up of the credit crisis and gives directions to improve policies of banks and governments as well.

Keywords: Banking sector, Bible, bonus system, Calvin, credit crisis, golden rule, reciprocity, government regulation, restriction on charging interest

JEL Classification: B31, B59, G01, G21, G31, Z12

Suggested Citation

Graafland, Johan, Calvin’s Restrictions on Interest: Guidelines for the Credit Crisis (November 12, 2009). European Banking Center Discussion Paper No. 2009-22, CentER Discussion Paper Series No. 2009-90, Available at SSRN: https://ssrn.com/abstract=1513173 or http://dx.doi.org/10.2139/ssrn.1513173

Johan Graafland (Contact Author)

Tilburg University - Center for Economic Research ( email )

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