Economic Definition of loan loss reserves. Defined.
Offline Version: PDF
Term loan loss reserves Definition: A special account set aside by banks acting as a buffer between deposits and net worth that's used in case a loan is not repaid. Without this reserve, an unpaid loan on the asset side of a bank's balance sheet would require an adjustment of deposits or net worth on the liability side. The loan loss reserve is used for this adjustment.
Permalink: https://glossary.econguru.com/economic-term/loan+loss+reserves