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.
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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.