# Loan-to-Deposit Ratio

*Banking & Payments — Finicade finance glossary*

The loan-to-deposit ratio compares a bank's loan book to its deposit base. Below 100% means deposits fund all lending; above means the gap is filled with wholesale funding, which is cheaper in good times and disappears in bad ones. Ratios well above 100% preceded the failures of Northern Rock and several others, making it one of the simplest early-warning ratios in banking.

**Formula:** `LDR = Total loans ÷ Total deposits`

**Also known as:** LDR, loans to deposits

**Related terms:** [Wholesale Funding](https://finicade.com/glossary/wholesale-funding), [Liquidity Coverage Ratio](https://finicade.com/glossary/liquidity-coverage-ratio), [Commercial Bank](https://finicade.com/glossary/commercial-bank), [Liquidity Risk](https://finicade.com/glossary/liquidity-risk), [Net Interest Margin](https://finicade.com/glossary/net-interest-margin)

Source: https://finicade.com/glossary/loan-to-deposit-ratio