Question

why formal source of creidit are preferred

Answer 1

1) bcz it follows a legal process
2) interest rate is much less
3) there is not any exploitation of the borrower
4) terms of credits are initially declared

Answer 2

hii I will help you ✌️

=> Formal sources of credit preferred over Informal sources of credit because:

i. Formal sources have low cost of borrowing

ii. Higher Income through cheap borrowing

iii.No exploitation and debt trap.