Loanable Funds

Loanable funds is the sum total of all the money people and entities in an economy has decided to save and lend out to borrowers as an investment rather than use for personal consumption. Let’s check out a classical concept explaining loanable funds. In economics, the loanable funds doctrine is a theory of the market industry interest rate. Based on this approach, the interest rate relies on the demand for and offer of loanable funds.