In this chapter, we'll look at the modern forms of money and how they are linked with the banking system.
On one side are the depositors who keep their money in the banks and on the other side are the borrowers who take loans from these banks.
Economic activities require loans or credit. Credit, as we saw can have a positive impact, or in certain situations make the borrower worse off.
Credit is available from a variety of sources. These can be either formal sources or informal sources.
Terms of credit vary substantially between formal and informal lenders.
It is essential that the total formal sector credit increases so that the dependence on the more expensive informal credit becomes less. It is necessary for development.
