This comes from the model environment where borrowers are physically separated from lenders when t is realized.
The borrower worked for the lender, or substituted someone to work in his or her place, in lieu of paying interest on the loan.
It takes the form of a rebate on the interest rate prevailing on the loan market for a given category of borrowers and projects.
Economic growth promotes financial development by increasing borrowers' collateralizable net worth.
Intuitively, higher transfers from the government enhance the internal financing capabilities of private-sector borrowers, and thereby facilitate the production of capital.
Officially, the government had reasoned that a higher ratio would reduce its commitments abroad and would also help improve the country's image as a borrower.
In the most severe cases, no further cash flows are being paid by the borrower.
A pivotal bank function, therefore, is to intermediate between savers who demand complete liquidity and borrowers who require non-marketable loans.
