Net Borrower

AAA

DEFINITION of 'Net Borrower'

An entity that borrows more than it saves or lends out. A net borrower could be a company, country, government, group or individual. Borrowing can take the form of debt by acquiring goods and/or services under the stipulation of future payments, borrowing funds, or by issuing debt, such as bonds. Net borrowing occurs when the monetary summation of these borrowing activities exceeds the monetary amount of funds and assets lent/saved. Also known as "net debtor".

INVESTOPEDIA EXPLAINS 'Net Borrower'

A country is a net borrower when it is running a deficit and is also known as a capital importing country. For example, a country might acquire capital by selling debt instruments such as bonds to international investors or to its own residents.

This is not considered good or bad for a country. If a country has a capital inflow then the international community feels it's a safe place to invest. Also capital inflows potentially allows for future levels of productivity that would otherwise be unattainable.

Net borrowers will be worse off when interest rates go up if their borrowing rates are not fixed.

RELATED TERMS
  1. Current Account Deficit

    A measurement of a country’s trade in which the value of goods ...
  2. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
  3. Current Account

    The difference between a nation’s savings and its investment. ...
  4. Country Limit

    The aggregate limit that a bank places on all borrowers in a ...
  5. Financing Statement

    A written document outlining the financing agreement between ...
  6. Import

    A good or service brought into one country from another. Along ...
Related Articles
  1. Economics

    Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.
  2. Economics

    What Is The Balance Of Payments?

    The balance of payments helps countries to track how much money is coming in and how much money is going out. Learn more about BOPs here.
  3. Budgeting

    Current Account Deficits: Government Investment Or Irresponsibility?

    Deficit can be a sign of trouble for some countries, and of health for others. Find out what it means when more funds are exiting than entering a nation.
  4. Economics

    Can Internet companies be vertically integrated?

    Find out how online businesses are beginning to take advantage of vertical integration for many of the same reasons as traditional businesses.
  5. Professionals

    Understanding Interpersonal Skills

    Interpersonal skills are the social skills people use to interact effectively with other people. A lack of good interpersonal skills may lead to unsuccessful personal relationships, as well as ...
  6. Professionals

    Who Counts as an Entrepreneur?

    An entrepreneur is a person who starts a new business or organization, taking some personal financial risk to do so. He or she may quit a secure job to devote time to starting the new business, ...
  7. Investing

    Understanding Turnover

    Turnover has a number of different, but related, meanings depending on the context in which it is used. Generally, it means the number of times an item is replaced with a new or similar version ...
  8. Investing

    What are Operating Expenses?

    An operating expense is any expenditure made for the purpose of operating a business. These expenses are the day-to-day costs that help keep the business going. Operating expenses are reflected ...
  9. Investing

    What's Overhead?

    Overhead is an accounting term used for expenses that have to be paid even if the business doesn’t earn any revenue. The business would not be able to operate without paying its overhead expenses, ...
  10. Investing

    What's a Bank Guarantee?

    Bank guarantees are used to assure a third party of payment or performance of an obligation. The obligation can be either to pay an amount due or to perform on a contract. By granting the guarantee, ...

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center