lending-policy

Vocabulary Word

Definition

'Lending-policy' is a set of guidelines, which financial institutions use to determine who to lend to, how much to lend, and under what terms. It can change based on the economy or risk.

Examples in Different Contexts

In central banking, 'lending policy' refers to the overarching rules governing how banks lend to each other and the public. A central bank official might declare, 'The new lending policy aims to stimulate economic growth by lowering interest rates.'

Practice Scenarios

Microfinance

Scenario:

With our focus on rural entrepreneurship, how can we ensure our services are reaching the people most in need?

Response:

Maybe we could adjust our lending policy to provide more loans to financially disadvantaged rural population.

Investment

Scenario:

Despite the attractive return rates, we need to be selective about who we finance for company acquisition.

Response:

That's a good point. We could adjust our lending policy to focus more on the buyer's financial health.