Interest compensation for risk is distributed, granted. X percent of creditors will default on their loans. You don't know ahead of time who will and who won't.

Interest compensation for risk is distributed, granted. X percent of creditors will default on their loans. You don't know ahead of time who will and who won't. So demand Y percent from everyone over and above what you would in a world where everyone paid. If that's not what you are getting at, I don't get your comment? Unless we are talking of a foolish lender? Edit: Durr. Just got it. You are talking about the return the lender receives, the reason he lends instead of consumes. Yes, part of interest is risk compensation.