Loanable Funds

In economics, the loanable funds market is a hypothetical market that brings savers and borrowers together, also bringing together the money available in commercial banks and lending institutions available for firms and households to finance expenditures, either investments or consumption. Savers supply the loanable funds; for instance, buying bonds will transfer their money to the institution issuing the bond, which can be a firm or government. In return, borrowers demand loanable funds; when an institution sells a bond, it is demanding loanable funds. Another term for financial assets is "loanable funds", funds that are available for borrowing, which consist of household savings and sometimes bank loans. Loanable funds are often used to invest in new capital goods, therefore, the demand and supply of capital is usually discussed in terms of the demand and supply of loanable funds.

Read more about Loanable Funds:  Interest Rate, Equilibrium, Rate of Return On Capital

Other articles related to "loanable funds, funds":

Deficit Spending - Government Deficits - Loanable Funds
... economists believe government deficits influence the economy through the loanable funds market, whose existence Chartalists and other Post-Keynesians ... in this market increases the demand for loanable funds and thus (ignoring other changes) pushes up interest rates ... raises the amount of saving done by individuals and corporations and thus the supply of loanable funds, lowering interest rates ...
Loanable Funds - Rate of Return On Capital
... capital" is taken into account when determining the demand for loanable funds ... the rate of return on capital is greater than or equal to the interest rate on paid on funds borrowed, firms will continue to demand loanable funds ...