Lending Freeze

Definition of 'Lending Freeze'


A period of time when banks either do not have excess money to loan or implement strict rules regarding loan qualification so that less lending is approved. This is a protective measure by the banks to ensure that they do not run out of capital or expose themselves to increased risk. The result is that borrowers have less access to loans, and therefore are unable to secure a mortgage, an automobile loan or business loans, which can negatively impact hiring and expansion.

Investopedia explains 'Lending Freeze'


Lending freezes occur when banks need to protect against further losses. Banks may not halt lending altogether, but will become more selective when it comes to handing out loans. The credit crisis of 2007-2008 forced companies to make difficult choices; without access to loans, many corporations were forced to make large-scale layoffs, while individuals had very little chance to secure credit.



comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another market so that it balances out. So when examining a specific market, if all other markets are in equilibrium, Walras' Law asserts that the examined market is also in equilibrium.
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following:
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option is purchased and the lower premium option is sold - both at the same time. The higher the debit spread, the greater the initial cash outflow the investor will incur on the transaction.
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
Trading Center