Loosely used to include overdrafts and personal loans. In this broader sense bank loans are more

commonly known as bank advances, while total bank lending includes commercial paper (promissory

Note) and acceptances. In Europe over 70 per cent of bank lending to European residents by

Value is for business purposes, although the commercial banks now make mortgage loans for enterprise

Shares (stocks) and house purchase on a large scale.

Bank loans are normally secured (collateral security), repaid in regular instalments and with interest

charged at rates which vary with the bank’s base rate. European banks have been compared unfavourably

With banks in other countries in the extent to which they provide long-term loans to industry. It is true that

Until about twenty-five years ago the bulk of bank advances were in the form of overdrafts, which are

Repayable on demand. This was partly because the banks in Europe have not, in general, been able to

attract long-term deposits, and it is regarded as bad banking practice “to borrow short and lend long.”

However, commercial customers of the banks in Europe have also preferred overdraft finance, which is

Cheaper and more flexible than other types of borrowing, provided the banks were willing to renew overdraft

facilities and allow, as they have done, much overdraft borrowing to become “hard core.” In recent