Net Lending

DEFINITION of 'Net Lending'

The amount of extra funds that a sector has available to provide for either direct and indirect lending purposes to other similar counter-parts.

Net lending is used as a balancing item in the capital account. It is calculated as follows:

Net Lending



Where:
CT = Capital Transfers
NFS = Non-Financial Assets

BREAKING DOWN 'Net Lending'

The company must meet all other obligations before there is any consideration to lend out funds. The net lending of the total economy is the sum of the net lending or borrowing of the institutional sectors. It corresponds to the net resources that the total economy has available to supply to the rest of the world.

RELATED TERMS
  1. Lending Facility

    A mechanism that central banks use when lending funds to primary ...
  2. Bond for Bond Lending

    A lending structure used in the Federal Reserve's security lending ...
  3. Bank Lending Survey

    A questionnaire circulated by a country's central banking authority ...
  4. Legal Lending Limit

    The aggregate maximum dollar amount that a single bank can lend ...
  5. Excess Loans

    A loan made by a state chartered or national bank to an individual ...
  6. Securities Lending

    The act of loaning a stock, derivative, other security to an ...
Related Articles
  1. Credit & Loans

    What Goldman Sachs’s Online Lending Means For Banking

    Recently Goldman Sachs has announced its entry into the online lending space. Most commonly known as an investment bank, Goldman’s newest venture may provide insight into the future of online ...
  2. Investing

    Overnight Rate

    Learn about how banks use this interest rate when lending to other banks.
  3. Credit & Loans

    Peer-To-Peer Lending - Determining The Future Of Banking Across The World

    The peer-to-peer lending industry continues to flourish. What does this mean for the future of loans from banks?
  4. Investing Basics

    Cash Flow Lending Vs. Asset-Based Lending

    When companies need financing, they rely on two primary forms of lending: cash flow-based and asset-based lending. We look at the pros and cons of each.
  5. Options & Futures

    Lending Clubs: Better Than Banks?

    If you need to borrow money and your credit is making it tough, this new option may be just what you're looking for.
  6. Options & Futures

    Peer-To-Peer Lending Breaks Down Financial Borders

    Banks are no longer the only option for a loan - the P2P lending system operates without them.
  7. Trading Strategies

    How Does Securities Lending Work?

    Securities lending is the act of loaning a stock or other security to an investor or firm.
  8. Economics

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  9. Investing

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  10. Entrepreneurship

    How Able Lending Works

    A new wave of peer-to-peer and peer-to-business lenders is reshaping the way borrowers obtain credit. Able's unique take may set it apart.
RELATED FAQS
  1. Who do hedge funds lend money to?

    Discover the various entities that hedge funds are lending to, and the reasons why these hedge funds have been providing ... Read Answer >>
  2. What impact does the Federal Reserve have on a bank's profitability?

    Learn how the Federal Reserve impacts a bank's profitability with its influence on the discount rate, federal funds rate ... Read Answer >>
  3. What are the most important interest rates?

    Learn about the most important interest rates in the economy; the Federal funds rate and discount rate are set by the Federal ... Read Answer >>
  4. How does my brokerage firm make money off my trades?

    I have a lot of cash being held by my brokerage firm that I never use for trading. Since they pay me virtually nothing for ... Read Answer >>
  5. What economic indicators are important to consider when investing in the banking ...

    Find out which economic indicators are most useful for investors in the banking sector, especially those influenced by central ... Read Answer >>
  6. How does a government raise the economy's money supply?

    Learn about methods the government uses to expand the money supply and how it can loosen money by raising interest rates ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center