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.

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