That is, in effect, a limit on how risky their loans can be if they want to stay in business. The more likely someone is to default on a loan, the higher the in

That is, in effect, a limit on how risky their loans can be if they want to stay in business. The more likely someone is to default on a loan, the higher the interest rate needs to be in order for it to have a positive expected value for the lender. Or, to put it another way: the more restrictive the cap on interest, the more poor people become unable to get an emergency loan under any circumstances.