compensating_balance.n.01

'compensating_balance.n.01'

[compensating_balance.n.01] as in: a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line of credit at a bank

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Examples:
the compensating balance increases the effective interest rate to the bank since the net amount loaned is reduced but the interest paid is unchanged