INTEREST

Introduction
Capital is one of the factor of production
and entrepreneur or owner of capital can use capital
for some productive purpose . However when owner
of capital obtains himself from use of capital he
expects some reward for this abstinence . Here the
concept of interest comes in picture.

Definitions
Interest is the return from the fund of capital
--- Celigeman
Interest is the premium which has to be offered to
include people to have their wealth in some form
other than horded money .it is reward of parting
--- Keynes

Factor Affecting Rate of

Interest
Demand for capital
Transaction motive
Precautionary motive
Speculative motive
Purpose of borrowing
Time period of borrowing
Type of security offered
Status of Borrower
Productivity of capital
Competition in market
Degree of capital