4 The opportunity to borrow against future income streams reduced the constraints on the ability of entrepreneurs to invest in bigger machines and larger premises. Today, access to external funding is no less important. It has the potential to spur economic innovation and allows production facilities to be operated efficiently through standing credit lines. Access to credit is not only important for businesses.
Students can receive a loan in expectation of the higher income that they are likely to earn later in their lives. Student loans permit the enjoyment of the benefits of a higher education at a time in life when income is low. Credit makes promising projects possible – whether they are embodied in physical capital or in better education.