Business, Legal & Accounting Glossary

Definition: Haircut

Quick Summary of Haircut

The initial margin in a repo transaction, namely the difference between the market value and the value ascribed to collateral used in the transaction, generally expressed as a percentage of the market price. It is also used to describe realised investor losses in a debt restructuring.

What is the dictionary definition of Haircut?

Dictionary Definition

legal In a bankruptcy proceeding, the proportional reduction in the debt that will be paid to each creditor, based on an evaluation of the total debt owed and the total assets of the debtor.

Full Definition of Haircut

The percentage by which the market value of a security used as collateral for a loan or as a margin payment is reduced. The size of the haircut reflects the degree of risk a lender places on the securities. A one per cent haircut would allow a lender to lend 99 per cent of the value of the collateral; a 15 per cent haircut would allow it to lend 85 per cent.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Haircut. Payroll & Accounting Heaven Ltd. September 22, 2021
Chicago Manual of Style (CMS):
Haircut. Payroll & Accounting Heaven Ltd. (accessed: September 22, 2021).
American Psychological Association (APA):
Haircut. Retrieved September 22, 2021, from website:

Definition Sources

Definitions for Haircut are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th April, 2020 | 9 Views.