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. Consumer And Business Lending Initiative

    A plan initiated to aid in the government's goal of correcting ...
  4. Peer-To-Peer Lending (P2P)

    A method of debt financing that enables individuals to borrow ...
  5. Bank Lending Survey

    A questionnaire circulated by a country's central banking authority ...
  6. Vendor Financing

    The lending of money by a company to one of its customers so ...
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. Trading Strategies

    Eyeing a Loan? Consider Skipping the Banks

    Peer-to-peer lending platforms, such as Lending Tree, Lending Club and Prosper, offer borrowers newfound leverage. Here's a look.
  3. Investing

    Overnight Rate

    Learn about how banks use this interest rate when lending to other banks.
  4. Personal Finance

    The Banking System: Commercial Banking - How Banks Make Money

    ByStephen D. Simpson, CFA As mentioned before, banks basically make money by lending money at rates higher than the cost of the money they lend. More specifically, banks collect interest on ...
  5. 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.
  6. Professionals

    Borrowing And Lending Money

    A registered representative or an investment advisor may not borrow money or securities from a client unless the client is a bank or other financial institution that is in the business of lending ...
  7. Personal Finance

    The Banking System: Commercial Banking - Where Commercial Banks Are Vulnerable

    ByStephen D. Simpson, CFA Credit RiskCredit risk is arguably the most obvious risk to a bank. A bank's business model is basically predicated on the idea that the large majority of lenders will ...
  8. Markets

    The Origins of the Chinese Stock Market Collapse

    Learn about some of the reasons for the volatility in the Chinese stock market, including expansion of margin lending and governmental support.
  9. 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.
  10. Personal Finance

    The Banking System: Commercial Banking - Business Lending

    ByStephen D. Simpson, CFA Commercial lending - lending to businesses - is really a two-tier market in the United States. At the level of large corporations, bank lending is not as significant ...
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. How does a credit crunch occur?

    A credit crunch occurs when there is a lack of funds available in the credit market, making it difficult for borrowers to ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. What types of assets and payments are recorded in the capital account?

    Read a brief overview of the definitions of the capital account, where it is used, and what types of assets and payments ... Read Answer >>
  6. When did people first start using collateral to secure loans?

    Read about the history of lending and collateral, including a time when an entire nation was pledged as collateral for all ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center