could you tell me if I'm figuring it out well?
financial institutions often "borrow short and lend long"

meaning that institutions get money and then gives it.
I don't know what he wants to say when writing "short and long" maybe as it is out of context it's difficult to know.

Question

could you tell me if I'm figuring it out well?
financial institutions often "borrow short and lend long"

meaning that institutions get money and then gives it. 
I don't know what he wants to say when writing "short and long" maybe as it is out of context it's difficult to know.

Answer

As Elizabeth says banks "lend long" by loaning people money for long term mortgages. They "borrow short" by taking money from depositors - as a depositor you are generally earning interest and you can take out your money at any time - you are therefore essentially making a short term loan to the bank.

Answer

I think that "borrow short and lend long" describes a behavior where you try to immediately try to repay debts while letting everyone else's debts become bigger due to compound interest.

Answer

I'm sure someone with financial know how will be able to answer your question. I'd guess that banks borrow short-term and lend long-term. So if I've got a 30-year mortage on my house the bank may finance that loan with a series of short-term (say one year) loans of its own.

Answers · 3

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