Abstinence theory of interest
Encyclopedia
Abstinence Theory of Interest asserts that the money
used for lending purposes is the money not used for consumption
- which means, earning interest
by abstaining from spending makes the funds possible and available for borrowers.
The originator of the theory is Nassau William Senior
.
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
used for lending purposes is the money not used for consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
- which means, earning interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
by abstaining from spending makes the funds possible and available for borrowers.
The originator of the theory is Nassau William Senior
Nassau William Senior
Nassau William Senior , English economist, was born at Compton, Berkshire, the eldest son of the Rev. JR Senior, vicar of Durnford, Wiltshire.-Biography:...
.