Answer the following question.
Describe the importance of formal sources of credit in economic development.
Formal sources of credit are beneficial in the sense that they provide credit at reasonable rates without any undue exploitative practices as faced under informal sources of credit. For instance, taking credit from informal sources can have serious repercussions in the form of exorbitant rates of interest, high mortgage obligations, etc. Formal sources of credit are organized and from such exploitative practices.