Domestic credit to private sector in 2005

Credit is the provision of resources (such as granting a loan) by one party to another party where that second party does not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources (or material(s) of equal value) at a later date. The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds The bond market (also known as the debt, credit, or fixed income market) is a Financial market where participants buy and sell Debt A stock market, or (equity market is a private or public market for the trading of company Stock and derivatives of company The foreign exchange ( currency or forex or FX) market refers to the market for currencies. The derivatives markets are the Financial markets for derivatives The market can be divided into two that for exchange traded derivatives and that for Commodity markets are markets where raw or primary products are exchanged In Finance, the money market is the global Financial market for short-term borrowing and lending The spot market or cash market is a Commodities or Securities market in which goods are sold for Cash and delivered immediately Over-the-counter ( OTC) trading is to Trade Financial instruments such as Stocks bonds, commodities or derivatives Real estate is a legal term (in some jurisdictions notably in the USA, United Kingdom There are two basic financial market participant categories Investor vs See Investor AB for the Swedish investment company An investor is any party that makes an Investment. Speculation, in a financial context is making an investment that increases the overall risk in a portfolio Institutional investors are organizations which pool large sums of money and invest those sums in companies Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Structured finance is a broad term used to describe a sector of Finance that was created to help transfer Risk using complex legal and corporate entities Capital budgeting (or investment appraisal is the planning process used to determine whether a firm's long term Investments such as new machinery replacement machinery new Financial risk management is the practice of creating economic value in a firm by using Financial instruments to manage exposure to Risk, particularly Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, Financial statements (or financial reports) are formal records of a business' financial The most general definition of an audit is an evaluation of a person organization system process project or product A credit rating agency ( CRA) is a company that assigns Credit ratings for Issuers of certain types of Debt obligations as well as the debt instruments Personal finance is the application of the principles of Finance to the monetary decisions of an individual or family unit Debt is that which is owed usually referencing Assets owed but the term can cover other obligations A contract of employment is a category of Contract used in Labour law to attribute right and responsibilities between parties to a bargain Retirement is the point where a person stops employment completely A financial planner or personal financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning which includes Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Fractional-reserve banking is the banking practice in which Banks keep only a fraction of the value of their Bank notes and demand deposits in reserve A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states This is a list of Banks throughout the world Africa Central Bank Bank A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent In Economics, money supply, or money stock, is the total amount of money available in an Economy at a particular point in time Financial regulations are a form of Regulation or supervision which subjects Financial institutions to certain requirements restrictions and guidelines aiming to There are a variety of Finance designations or Accreditations that can be earned and awarded to those in the finance industry Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives A stock market bubble is a type of Economic bubble taking place in Stock markets when price of Stocks rise and become overvalued by any measure of Stock A recession is a contraction phase of the Business cycle. The U A stock market crash is a sudden dramatic decline of Stock prices across a significant cross-section of a Stock market. A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent Debt is that which is owed usually referencing Assets owed but the term can cover other obligations The first party is called a creditor, also known as a lender, while the second party is called a debtor, also known as a borrower. A creditor is a party (eg person organization company or government that has a claim to the services of a second party A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent In Economics a debtor is simply an entity that owes a Debt to someone else the entity could be an individual a firm a government or an organization In Finance, a Borrower is the party in a Loan agreement which receives money or other instrument from a Lender and promises to repay the lender in a specified

Any movement of financial capital is normally quite dependent on credit, which in turn is dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Financial capital is money used by Entrepreneurs and Businesses to buy what they need to make their products or provide their services Credit risk is the risk of loss due to a debtor's non-payment of a Loan or other line of credit (either the principal or Interest (coupon or both Faced

The term credit is used similarly in commercial trade, known as "trade credit", to refer to the approval for delayed payments for purchased goods. Trade is the willing exchange of goods, services, or both Trade is also called Commerce. Trade credit exists when one firm provides goods or services to a Customer with an agreement to bill them later or receive a shipment or service from a Sometimes, credit is not granted to a person who has financial instability or difficulty. Companies frequently offer credit to their customers as part of the terms of a purchase agreement. Organizations that offer credit to their customers frequently employ a credit manager. A credit manager is a person employed by an organization to make credit decisions concerning credit limits and terms of payment to their customers

Credit is denominated by a unit of account. A unit of account is a standard monetary unit of measurement of the market value/cost of goods services or assets Unlike money (by a strict definition), credit itself cannot act as a unit of account. Money is anything that is generally accepted as Payment for Goods and services and repayment of Debts. However, many forms of credit can readily act as a medium of exchange. An economic transaction or Trade involves the voluntary exchange of goods and services between two or more entities As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply. In Economics, money supply, or money stock, is the total amount of money available in an Economy at a particular point in time

Credit is also traded in the market. Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information The purest form is the credit default swap market, which is essentially a traded market in credit insurance. A credit default swap ( CDS) is a swap contract in which a buyer makes a series of payments to a seller and in exchange receives the right to a payoff if a credit A credit default swap represents the price at which two parties exchange this risk — the protection "seller" takes the risk of default of the credit in return for a payment, commonly denoted in basis points (one basis point is 1/100 of a percent) of the notional amount to be referenced, while the protection "buyer" pays this premium and in the case of default of the underlying (a loan, bond or other receivable), delivers this receivable to the protection seller and receives from the seller the par amount (that is, is made whole). Risk is a Concept that denotes the precise probability of specific eventualities In Mathematics, a percentage is a way of expressing a number as a Fraction of 100 ( per cent meaning "per hundred" In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest

See also

• Credit Bureau
• Credit report
• Credit risk
• Credit score
• Debt
• Default (finance)
• Fair Credit Reporting Act
• Fair Isaac
• Financial literacy
• Installment credit
• Interest
• Payday loan
• Peer-to-peer lending
• Predatory lending
• Revolving credit
• Risk-return spectrum
• Settlement (finance)
• Subprime
• Social Credit

External links

• New York Times/PBS FRONTLINE multimedia collaboration "Secret History of the Credit Card," November 2004.
• Wikinvestopedia Credit/Lending Glossary