The government intervention is helping the redistribution of the resources since money is flowing from the people who do not want to invest them to people who really need the money to start their business. Therefore, the market allocates the money efficiently. People who are not qualify for normal loan and need money to start their business can get the money easier. Even though the moral hazard problem exists, it doesn’t affect that much in the market because the default rate is high for some franchising business, like Cold-Stone, however, there are still a lot of good business. According to the article, franchise only count 10% of SBA loans. In a big picture, the government intervention can increase the efficiency of the market and stimulate economic growth.
As Keith Miller, Chairman of the Coalition of Franchise Associations, states “Banks wouldn’t have made the loans if it wasn’t for the guarantee.” So it is so hard for the money to distribute to the people who really need it. The low qualification requirement increases the demand of the loans and increase the total amount of investment. The government should intervene the the financial market appropriately even it may sacrifice some taxpayers in order to speed up the growth of the economy.
The government intervention is helping the redistribution of the resources since money is flowing from the people who do not want to invest them to people who really need the money to start their business. Therefore, the market allocates the money efficiently. People who are not qualify for normal loan and need money to start their business can get the money easier. Even though the moral hazard problem exists, it doesn’t affect that much in the market because the default rate is high for some franchising business, like Cold-Stone, however, there are still a lot of good business. According to the article, franchise only count 10% of SBA loans. In a big picture, the government intervention can increase the efficiency of the market and stimulate economic growth.
As Keith Miller, Chairman of the Coalition of Franchise Associations, states “Banks wouldn’t have made the loans if it wasn’t for the guarantee.” So it is so hard for the money to distribute to the people who really need it. The low qualification requirement increases the demand of the loans and increase the total amount of investment. The government should intervene the the financial market appropriately even it may sacrifice some taxpayers in order to speed up the growth of the economy.
The government intervention is helping the redistribution of the resources since money is flowing from the people who do not want to invest them to people who really need the money to start their business. Therefore, the market allocates the money efficiently. People who are not qualify for normal loan and need money to start their business can get the money easier. Even though the moral hazard problem exists, it doesn’t affect that much in the market because the default rate is high for some franchising business, like Cold-Stone, however, there are still a lot of good business. According to the article, franchise only count 10% of SBA loans. In a big picture, the government intervention can increase the efficiency of the market and stimulate economic growth.
As Keith Miller, Chairman of the Coalition of Franchise Associations, states “Banks wouldn’t have made the loans if it wasn’t for the guarantee.” So it is so hard for the money to distribute to the people who really need it. The low qualification requirement increases the demand of the loans and increase the total amount of investment. The government should intervene the the financial market appropriately even it may sacrifice some taxpayers in order to speed up the growth of the economy.
The government intervention is helping the redistribution of the resources since money is flowing from the people who do not want to invest them to people who really need the money to start their