Nonproductive loan

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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It is the major cause of the banks sitting on "nonproductive loans".