loan

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Loan

Temporary borrowing of a sum of money. If you borrow $1 million you have taken out a loan for $1 million.

Loan

The extension of money from one party to another with the agreement that the money will be repaid. Nearly all loans (except for some informal ones) are made at interest, meaning borrowers pay a certain percentage of the principal amount to the lender as compensation for borrowing. Most loans also have a maturity date, by which time the borrower must have repaid the loan.

A loan may be guaranteed by collateral, meaning that the lender either keeps an asset belonging to the borrower until the loan is repaid or has the right to seize such an asset in the event of default. Often, loans are obtained to purchase a major asset, such as a house. These loans are generally guaranteed by the asset they are used to buy. Lending is a foundational component of capitalism.

loan

the advance of a specified sum of MONEY to a person or business (the BORROWER) by other persons or businesses, or more particularly by a specialist financial institution (the LENDER) which makes its profits from the INTEREST charged on loans. The provision of loans by COMMERCIAL BANKS, FINANCE HOUSES, BUILDING SOCIETIES etc. is an important source of CREDIT in the economy serving to underpin a substantial amount of spending on current consumption and the acquisition of personal and business assets.

Loans may be advanced on an unsecured or secured basis; in the latter case the lender requires the borrower to offer some form of COLLATERAL SECURITY (for example property deeds) which the lender may retain in the event of the borrower defaulting on the repayment of the loan. See BANK LOAN, INSTALMENT CREDIT, MORTGAGE, LOAN STOCK, DEBENTURE, LOAN GUARANTEE SCHEME, INTEREST RATE, SOFT LOAN.

loan

the advance of a specified sum of MONEY to a person or business (the BORROWER) by other persons or businesses, or more particularly by a specialist financial institution (the LENDER), which makes its profits from the INTEREST charged on loans. The provision of loans by COMMERCIAL BANKS, FINANCE HOUSES, BUILDING SOCIETIES, etc., is an important source of CREDIT in the economy, serving to underpin a substantial amount of spending on current consumption and the acquisition of personal and business assets.

Loans may be advanced on an unsecured or secured basis; in the latter case the lender requires the borrower to offer some form of COLLATERAL SECURITY (for example, property deeds) which the lender may retain in the event of the borrower defaulting on the repayment of the loan. See BANK LOAN, INSTALMENT CREDIT, MORTGAGE, LOAN CAPITAL, DEBENTURE, LOAN GUARANTEE SCHEME, INTEREST RATE, SOFT LOAN, BOND.

References in periodicals archive ?
The reaction of labor markets across the structure of production will be different when an increase in the supply of loanable funds is driven by monetary expansion rather than by a change in intertemporal preferences If the interest rate in the loanable funds market decreases due to central bank intervention (with intertemporal preferences unchanged) we would instead expect an increase in employment in both the early and late stages of production, assuming relatively nonspecific labor.
If the government issues debt, the demand curve in the market for loanable funds shifts to the right, increasing the interest rate and the quantity supplied of loanable funds traded.
Again, this is consistent with precepts of the standard international loanable funds approach relating saving, investment, and capital flows.
If the public attempts to save more by holding more bank liabilities, that will shift the supply of loanable funds curve to the right.
When discussing the mechanism that allows emergence of a difference between saving and financing, Borio refers to the framework of loanable funds described earlier here in the version of Mises (9).
An increase in currency in circulation results in reduced deposits and thus loanable funds available with the banks, which in turn hurt economic growth.
The effect of this increase in the supply of loanable funds depends on who borrows them and how they are used.
Less demand for loanable funds brings interest rate down which eventually rises due to expansionary policy of the government.
Mainstream economists argued that, depending on the overall capacity and capability of the developing countries, their development process would not be bounded by the availability of domestic resources of finance as capable countries could attracted global capital and therefore enhance the pool of loanable funds.
At root, the natural rate of interest reflects intertemporal preferences on both sides of the market for loanable funds.
The cycle starts following a credit expansion resulting from the accumulation of loanable funds, making the natural rate of interest fall below the real interest rate, i.
Lower interest rates can thus lead to lower consumption in surplus countries, thereby increasing the supply of loanable funds.