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Market Clearing

   Also found in: Wikipedia 0.01 sec.
Market clearing
Total demand for loans by borrowers equals total supply of loans from lenders. The market, any market, clears at the equilibrium rate of interest or price.

Market Clearing
A situation in which the demand for loans equals the supply of loans. That is, borrowers want to borrow the same amount of money that lenders are willing to lend. During a market clearing, the equilibrium rate of interest prevails, which ideally means that the cost of borrowing is neither excessively high nor low.


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BHP said on Wednesday that just 23p%of total iron volumes will be sold at these benchmark prices in the next 12 months, while 30% will be sold through new pricing mechanisms, a mix of quarterly negotiated pricing, market clearing price (spot market) and index-based pricing.
Vendors have been painfully slow adjusting their asking prices to market clearing levels and this is prolonging the pain of excess supply in the market.
In this way, simple market clearing can give rise to complex asset market dynamics.
 
 
 
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