Questions tagged [credit]

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1answer
26 views

Is there inverse relationship betweet prices of interest-bearing assets and the interest rate?

I was wondering about why investors converting out of interest-bearing assets into money in the money market cause the interest rate to increase. Then I remembered that there is inverse relationship ...
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2answers
39 views

Does people paying back their debts cause deflation?

The majority of the monetary supply results from credit, with every loan creating pairs of assets and liabilities representing the same underlying value. Considering that every time someone pays back ...
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4answers
229 views

How can people save in a equilibrium economy?

Two people on a desert island: John produces 100kg potatoes and sells them to Paul for \$100. Paul catches 100kg fish and sells it to John for \$100. GDP is \$200\$, right? Next year, they improve ...
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4answers
1k views

Mortgage loans from foreign banks at lower interest rates

I had a thought - what if I live in a relatively poor country like let's say Russia and I would like to buy a house. In order to do that, I need to take a mortgage loan. In Russia however, interest ...
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1answer
18 views

Can a commercial bank lend money from transaction/checking account as it would from a deposit account?

Transaction/checking accounts are highly liquid - M1 Deposit accounts are less liquid - M2 Per fractional reserve system, banks lend deposited money as credit to clients provided they keep a reserve ...
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0answers
20 views

Data on pawnbrokers credit

Do you have any idea on where to find data on pawnbrokers credit in the US, Italy, Germany or France? I'm interested both in aggregated data (prevealing interest rates, volume of credit, default rates....
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2answers
38 views

Higher interest rates and default probabilities for longer loan term

I am analyzing LendingClub data with two available loan terms: 36 and 60 months. In the course of my analysis I have spotted that both the interest rates associated with each loan and the default ...
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3answers
63 views

Why does the nominal interest rate equal 25% in this problem, instead of 16.4%?

My reasoning: The nominal interest rate = the real interest rate + the expected inflation rate. We need to calculate the nominal interest rate. We know the expected inflation rate, so the only problem ...
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0answers
21 views

Interventions during the current Corona crisis: Government credits

In the light of the current public health crisis caused by COVID-19, I would like to know more about how government or central bank interventions are supposed to influence and limit the economic ...
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1answer
21 views

Can you recursively forecast one variable using two variables?

My question is probably very elementary but I haven't been able to find an explanation of recursive forecasting that I fully understand. I've read a journal article that seemed to recursively ...
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1answer
53 views

Tendency of the rate of profit to fall

https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall The tendency of the rate of profit to fall (TRPF) is a hypothesis in economics and political economy, most famously expounded by ...
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1answer
31 views

statistics about loaning tradeoff

It is very likely that Banks have more loans that have been repaid compared to loans that have not been repaid. Otherwise the bank would lose money instead of money. (otherwise the bank will go ...
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1answer
58 views

Why would creditors accept a comfort letter that can't be legally enforced, from borrowers that refuses to guarantee?

Prof Richard Taylor, Damian Taylor. Contract Law Directions (6 edn, 2019). p 65. Para 1. You might be wondering why businessmen bother to make an agreement if it has no legal effect—is it worth ...
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0answers
19 views

Investments during recession

During Recession, banks loans decrease which leads to financial constraints and ultimately Investment suffers and declines. my question is - "Are loans lower because of demand or supply?" My ...
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1answer
56 views

Why loans/debt can cause inflation?

I learned that inflation can be a result of more loans or debt. When there are too much borrowers in the country, people will have more money to spend and the amount of products is the same so prices ...
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1answer
37 views

Why do loans drive the economy?

Someone was saying: "Why is credit so important? Because when a borrower receives credit (loan), he's able to increase spending. Spending drives the economy. This is because one person's spending is ...
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2answers
42 views

How do efficient credit markets allocate capital properly?

I've learned that efficient credit markets should theoretically allocate capital efficiently, which means that all possible investments should have the same marginal product of capital (assuming some ...
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2answers
139 views

difference between demand for money and credit

As far as I understand in both cases we are seeking money that we don't have and would like to borrow. That being said what I find even more misleading is the fact that as a nominal interest rate ...
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2answers
485 views

Why does the government need to control interest rates?

Context As far as I understand, economic cycles are mostly dependent on the amount of demand (which is influenced by money supply, which is in turn influenced by the availability of credit). Since ...
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1answer
66 views

Does credit really help an economy?

I'm reading Ray Dalio's How the Economic Machine Works, and although I understand the role of credit in an economy, I don't understand whether credit actually adds any value to an economy. Ray says ...
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1answer
56 views

What is consumer debt and how could it make businesses vulnerable?

Consumer debt is the obligation to pay for the credit that the customers have used. But, how can tapping out more credits make business more vulnerable?
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1answer
81 views

Does Chile have a government owned Export Import bank like the US or India?

If not, what type of trade financing do Chilean exporters or importers get? Is it all from private banks and insurers?
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1answer
5k views

Was the aid in the Marshall Plan a loan?

In the aftermath of the Second World War the USA organised the Marshall plan for the post-war reconstruction of Europe. I take it this was actually a loan of some kind; on what kind of terms was the ...
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8answers
3k views

Would insurance plan be necessary if we had instant access to credit?

Assuming one could instantly have access to an loan to cover his recent loss/accident at an affordable interest, would it make sense to pay premium for an insurance plan? I was thinking that it would ...
3
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1answer
7k views

What is the Credit-to-GDP gap exactly?

I have been hearing a lot about this metric in relation to rising fears of a Chinese financial crisis. I am wondering, what exactly does this mean? I am told it refers to the difference between ...
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1answer
213 views

Why did the stock of consumer loans held by commercial banks jump in March 2010?

The graph below refers to "Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks", from here. What happened in March 2010? The data come from the balance sheets of commercial ...
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1answer
1k views

Free Data Source for Credit Spreads?

Credit spreads are a key economic indicator. They are the difference between yields on corporate and government debt. They are a measure of confidence in the private sector, they provide insight into ...
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53 views

Does only enough money exist to pay the principal on all debts, and none for the interest or for anything else?

This is reported to be the testimony of Marriner Eccles, Governor of the Federal Reserve Board, before the House Committee on Banking and Currency, on September 30, 1941. Does this mean that only ...