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A Borrowing limit is the amount of money that individuals could borrow from other individuals, firms, banks or governments. There are many types of borrowing limits, and a natural borrowing limit is one specific type of borrowing limit among those. When individuals are said to face the natural borrowing limit, it implies they are allowed to borrow up to the sum of all their future incomes. A natural debt limit and a natural borrowing constraint are other ways to refer to the natural borrowing limit. Although the concept is widely discussed in the economic literatures, it is less likely to observe lenders willing to lend up to the natural borrowing limit. In the real economic activities, borrowing limits are usually much more tighter than the natural borrowing limit due to the immature financial systems of the economy or the gap between the amount of information that the borrowers and lenders have(The latter is usually referred to as an asymmetric information problem). == Illustrative Example == Since the terminology is originally introduced from academia, it is worth introducing an illustrative example to provide better understanding to non-economist readers. Financing law school tuition fee in the United States fits into the illustrative purpose perfectly. Many law school students do not have earnings while they are students. Borrowing money from the bank to finance their cost of living while they are students, and paying back after becoming a lawyer is very common way of funding their costs. For simplicity, let's divide law students' lifetime into two periods : a law school student period and a lawyer period. During the law student period, their income is $0 but they need at least $200,000 to finish their degree. After becoming a lawyer, their income increases to $200,000 per year and they work for 30 years. Summing up all the yearly future incomes, their lifetime income becomes $6,000,000 (assuming interest rate is 0%). In order for law students to finish the degree, they have to borrow money from the bank and pay it back after becoming a lawyer. However banks will not lend infinite amount money unless they are philanthropists. They will only lend reasonable amount money so that they could receive back from the students without too much risk. If banks are willing to lend $6,000,000 to the student, then, it is said that students face the natural borrowing limit, because they are allowed to borrow exactly up to the amount which they earn for their lifetime. If students are only allowed to borrow less than $6,000,000, then it is said that they face a borrowing limit tighter than the natural borrowing limit. One caveat is that the concept natural borrowing limit does not depend on what amount of money that law students borrow. In this example, they will not borrow more than $200,000, but, as long as they are ''allowed'' to borrow $6,000,000, then it is enough to say students are in the natural borrowing limit world. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Natural borrowing limit」の詳細全文を読む スポンサード リンク
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