Nonproductive loan

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Nonproductive loan

A loan that increases spending power, but is used in business that does not directly increase the economy's output, such as a leveraged buyout loan.

Nonproductive Loan

A loan that does not increase an economy's total output, but may increase the economy's total spending power. One of the most common examples of a nonproductive loan is leveraged buyout. Nonproductive loans are made by commercial banks.
References in periodicals archive ?
The EAC, for instance, is having difficulty servicing its existing loans - its chairman said its surplus was not enough to cover its debt repayment obligations - and would have no chance of surviving if it took on a non-productive loan of e1/4500 million.
On some other parameters such as decrease in dependence on moneylenders, control over savings, decisions regarding use of savings and earnings the difference is no so significant which indicates that even non-productive loans can also have some empowerment effect in terms of building confidence and providing security.