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# Usury

## Definition

The practice of charging excessively high interest rates on loans, typically beyond what is legally permitted or economically justified by the productive use of the borrowed capital.

## Source Chapter

Book II, Chapter 4

## Context

Smith discusses usury in the context of legal interest rate regulation, arguing that prohibition of interest above legal rates often increases rather than decreases usurious practices by forcing legitimate transactions underground.

## Economic Domain

Regulation

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