Credit in Commerce and Finance

Ristizona.com - Credit, in commerce and finance, is a term used to donate transactions involving the transfer of money or other property on promise of repayment, usually at a fixed future date. The transferor thereby becomes a creditor, and the transferee, a debto. Hence credit and debt are simply terms describing the same operation viewed from opposite standpoints.

The principal classes of credit are as follows: (1) mercantile or commercial credit, which merchants extend to one other to finance production and distribution of goods; (2) investment credit, used by business firms to finance the acquisition of plants and equipment and represented by corporate bonds, long-terms notes, and other proofs of indebtedness; (3) bank credit, consisting of the deposits, loans, and discounts of depository institutions; (4) consumer or personal credits, which comprises advances made to individuals to enable them to meet expenses or to purchase, on a deferred-payment basis, goods or services for personal consumption; (5) real-estate credit, composed of loans secured by land and buildings; (6) public or government credit, represented by the bond issues of national, state, and municipal governments; and (7) international credit, which is extended to particular government by other governments, by the nationals of foreign countries, or by international banking institutions, such as the International Bank for Recontruction and Development. (Donald L. Kemmerer)