Who are the suppliers of loanable funds?

Question:

Who are the suppliers of loanable funds?

Loanable Funds:

Loanable funds can be described as the money that both institutions and other individuals have decided to save and lend out as loans. Equilibrium interest rate is arrived by analyzing the supply and demand of loanable funds. Equilibrium will occur where the demand intersects with the supply of loanable funds.

Answer and Explanation:

The suppliers of loanable finds include:

  1. The government. In case the government raises more revenue than it had planned to spend the excess amount can be lent out through financial market fund.
  2. Households. Households will supply loanable funds incase they have excess income.
  3. Foreign investors. When the interest rates are high in the country, foreign investors are attracted to invest in these countries, therefore, there will be a supply of funds in the country from foreign countries thereby increasing the supply of loanable funds.

Learn more about this topic:

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Loanable Funds: Definition & Theory

from Introduction to Business: Homework Help Resource

Chapter 25 / Lesson 29
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