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Compensating Balances Are Frequently a Part of Revolving Lending Arrangements

question 80

Essay

Compensating balances are frequently a part of revolving lending arrangements with banks,yet they add to the cost of financing for the borrower.Why,then,would borrowers agree to such terms?
What other types of alternative financing are available?


Definitions:

Norms

Standards or patterns of behavior that are accepted as typical or expected within a society or group.

Mature Group

A group characterized by advanced development in dynamics, interactions, and goals achievement.

Organizational Politics

The use of power and social networking within an organization to achieve changes that benefit the individual or a group.

Management

The process of dealing with or controlling things or people within an organization.

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