Roll-over of loans

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Updated: Aug 20, 2021

Allowing borrowers to renew loans when they fall due for repayment, rather than actually paying them off. This is common in two situations. In many cases the loans have been used to finance profitable transactions, such as buying goods for resale: the borrower could repay the loan, but has good prospects of profit from similar further transactions if the loan is the choice of rolling over the loan or writine it off as a bad debt, with adverse the choice of rolling over the loan or writing it off as a bad debt, with adverse effects on their own accounts. In such situations there is a strong temptation to roll over the loan, especially if there is some prospect that the borrower will eventually be able to repay it.

Reference: Oxford Press Dictonary of Economics, 5th edt.



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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.