In situations with high risks, credit might create further problems for the borrower. Explain.

In risky situations, borrowing money can make things worse. For example, a small farmer takes a loan to buy seeds, but a drought destroys the crops. With no income, the farmer can't repay the loan, gets into more debt due to high interest, and might lose their land used as collateral for the loan. This worsens their financial problems and can trap them in a cycle of debt and poverty.