Theory Of Interest -

: An extension of the classical view that includes bank credit and "dishoarding" (releasing idle cash) as part of the supply, treating interest as the price determined by the total supply and demand for loanable funds.

: Extra compensation for the possibility that the borrower may default. Theory of Interest

: Championed by Eugen von Böhm-Bawerk , this theory emphasizes that humans naturally value present goods more than future goods (agio). Interest is the "discount" applied to future satisfaction. Fundamental Mathematical Components : An extension of the classical view that