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Jump to navigation Jump to search Individuals or corporations borrow cash or goods from lenders, usually at interest, and are said to receive credit from those lenders. Most borrowers in the investment sector do so by issuing bonds or notes, which pay their holders a coupon or interest payment once or twice a year.

Down side[edit]

Companies usually borrow cash from investors by issuing bonds to fund growth or expansion, but investors also borrow securities from other investors or brokers if they want to profit by a short sale if they think the price will drop. The borrower immediately sells the security and later buys it back at the lower price, returns it to the original owner and keeps the difference.


Banks usually borrow short-term on the interbank market but U.S. institutions have recently borrowed far more heavily from the U.S. Federal Reserve since it began offering loans at very favorable interest rates following the 2008 credit crisis.[1] Banks and dealers borrowed an average of $437.53 billion per day in the week ending October 15, 2008 compared to $420.16 billion the week before.