<P> The loanable funds doctrine, by contrast, does not equate savings and investment, both understood in an ex ante sense, but integrates bank credit creation into this equilibrium condition . According to Ohlin: "There is a credit market...but there is no such market for savings and no price of savings". An extension of bank credit reduces the interest rate in the same way as an increase in savings . </P> <P> During the 1930s, and again during the 1950s, the relationship between the loanable funds doctrine and the liquidity preference theory were discussed at length . Some authors considered the two approaches as largely equivalent but this issue is still unresolved . </P> <P> While the scholarly literature uses the term loanable funds doctrine in the sense defined above, textbook authors and bloggers sometimes refer colloquially to "loanable funds" in connection with classical interest theory . This ambiguous use disregards the characteristic feature of the loanable funds doctrine, namely, its integration of bank credit into the theory of interest rate determination . </P>

Where does the supply of loanable funds come from