MARGINAL LENDER

  1. A financial institution or business that will only make loan to a borrower on a certain interest rate. The transaction will not take place if the rate of interest drops below the level set by the lender.
  2. In the European Union, it is the act of giving overnight liquidity to banks via European Central Bank. The interest rate on the loans they provided is called marginal lending rate, which is equivalent to the Fed funds in the United States.