Claim: European financial institutions could not easily lend to the workers, rendering labor immobile because of capital market imperfections (limitations that reduce the range of financial contracts that can be signed or honored); so to address this imperfection, the Virginia Company would allow laborers to borrow against their future earnings for a fixed number of years.
Evidence: European financial institutions could not easily lend to the workers since there was no effective way to enforce a loan from across the Atlantic, rendering labor immobile via the Atlantic because of capital market imperfections. Capital market imperfections are limitations that reduce the range of financial contracts that can be signed or honored. To address this imperfection, the Virginia Company would allow laborers to borrow against their future earnings at the Virginia Company for a fixed number of years in order to raise sufficient capital to pay for their voyage.