Usury laws establish a legal maximum interest rate (or price) that lenders may charge for a loan or extension of credit. These laws are, in effect, a form of price control. When a usury law is introduced, it may have no impact on the credit market or it may alter the way in which price and quantity are determined. Exactly what happens depends on where the usury ceiling is relative to the market rate. When the legal ceiling is above the market rate of interest, the law has no effect at all. The market forces of supply and demand are not bound by the usury.
