A loan is a transfer of risk, and a way to engage in growth faster than otherwise possible. Without loans (or investments, which are similar but involve a greater transfer of risk), any new venture would need to first save enough money to a) carry out the venture and b) survive if the venture fails. With a loan, the bank gives the capital right away, and assumes some of the risk - but takes a percentage if the venture succeeds.
Now, this does create value if done properly. Because the new venture (whether it be a new business, expansion of an existing one, or whatever) happens _right now_ instead of 10 years later, there's significant savings in opportunity cost. The bank simply pockets part of this savings in exchange for its assuming the risk of losing some or all of the money it lent.
It's only when the process screws up, and the bank misjudges the risk - or when the borrower misjudges how much they can repay without undue hardship, that problems occur. These are not failings in the idealized form of the moneylending system, but rather imperfect information (the former) or human shortsightedness (the latter).
Now, this does create value if done properly. Because the new venture (whether it be a new business, expansion of an existing one, or whatever) happens _right now_ instead of 10 years later, there's significant savings in opportunity cost. The bank simply pockets part of this savings in exchange for its assuming the risk of losing some or all of the money it lent.
It's only when the process screws up, and the bank misjudges the risk - or when the borrower misjudges how much they can repay without undue hardship, that problems occur. These are not failings in the idealized form of the moneylending system, but rather imperfect information (the former) or human shortsightedness (the latter).