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Questions tagged [credit]

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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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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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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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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
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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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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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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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54 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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Central bank rate hikes and credit demand

Can someone help me unpack the quoted statement below? Trying to understand how the supply of credit influences the fed raising rates. I guess, why do rates rise or fall in conjunction if the fed ...
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468 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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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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50 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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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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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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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 ...
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6k 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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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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749 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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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 ...