By Claire West

The effects of the recession have caused a new type of lending to emerge, as people turn to the 'Bank of Friends' to borrow over £7 billion to cover the gaps in their income according to new research from the Post Office®.

The study, which looked at lending between adults in the UK, highlighted that over a quarter of adults (26 per cent) have lent money to an average of four friends in the past 12 months, each borrowing an average of £133.

However, as financial conditions remain tough for households the research showed that less than half of the money borrowed in the last year has been repaid, with an outstanding balance of just under £3 billion owed by friends to friends. **

The 'Bank of Friends' has uniquely put its customers first despite the balance of its books, with 18 per cent of friends lending more than they can actually afford. Worryingly, 19 per cent of lenders can't even remember how much they lent to friends, but a generous 10 per cent of these said they do not need the cash back.

With no 'official' rate of interest imposed by the 'Bank of Friends', borrowers have offered alternative and imaginative ways to pay back the favour to their friends with

the most common being alcohol. The top five alternative ways to pay back the financial favour are:

1. Alcohol
2. A favour in return
3. A thank you kiss or hug
4. A meal out/ cooked dinner
5. Thank you card

Despite more than half (57 per cent) of lenders getting something in return, four in 10 adults (43 per cent) may be reconsidering their friendships after receiving nothing as a thank you.

Doug Strachan, Director of Financial Services at the Post Office, said: "Understandably, millions of households across the UK have needed to tighten their purse strings as the recession has taken its toll, and with money hard to come by from many lenders, people can be thankful that they have such good friends they can rely on.

"Not only does this research show another side effect caused by the recession, but it highlights how people want to help others, outside of their immediate families, through tough times. However, our survey did reveal that one in five people are lending more than they can afford, so the is Post Office urging people to make sure they don't put themselves, or their household, into financial difficulty when helping others."