Disbursement rate

The term disbursement rate may be used in connection to a loan pay-out. It may also refer to the rate at which an amount allocated is distributed. In both cases, a schedule for such pay outs is usually set.

In the context of investments, the term allocation is known as asset allocation, which is the distribution of funds among various types of securities. For instance, half of the total fund could be used for stocks and the other for bonds. In this case, such allocations are generally made in order to maximize the profits to be made and maintain stability of investments.

In most other cases, however, an allocation is made in accordance with the purposes of a certain plan. For example, a government needs to allocate a certain amount for its various agencies on a yearly basis. Such funds may be for the purpose of simply maintaining operations of these agencies, but may also be set for specific projects. Even though such a government may receive foreign aid for the implementation of such projects, it still needs to come up with counterpart funds or risk the possibility of project delay or foreign aid cancellation. This may thus cause disbursement rates in that particular country to either go down or remain in poor condition.

On the other hand, in the case of banks or other lending agencies, disbursement rates usually tend to be more stable as they are dependent on the schedule set in the loan agreement. This is one of the factors that may be useful to consider when deciding on which lending agency to approach.

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