Basifin.pptx - Group 9 CREDIT SYSTEM Mariela Eusebio Jack...

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Group 9CREDIT SYSTEMMariela EusebioJack Daniel PaduraRenaliza TalagtagFrances Abigail Abu
Mariela EusebioBasic Concepts of Credit
CreditThe word “credit” came from the Latin “creditum” which means trust. It refers to the ability to acquire something of value, such as goods, services, securities of money, at the present time in return for a promise to pay at some future time. (Chan,et.al 1996)According to Miranda (1994)credit represents both power and obligation on the part of the debtor. On the other hand, to the creditor, credit signifies the existence of a legal and moral right as well as an expectation of the fulfilment of a promise.Reporter: Mariela Eusebio
There are two parties involved in any credit transaction: a) creditor– provides the thing borrowedb) debtor– receives the thing borrowed and assumes the obligation to pay.Debt and credit are simply the same thing taken from two different points of view. Both are obligations to pay in the future. The said obligations is called creditif it refers to a person or institution to whom the future payment is to be made. And the obligation is debtif it refers to the person or institution who is obliged to pay in the future.Reporter: Mariela Eusebio
ACTIVITY: SEEKING TRUST
Basic Elements of Credit
Trust and Confidencethe essence of credit is confidence on the part of the creditor. Motivated thus by his faith in his fellowmen, the creditor parts with things of value in the expectation that he is rewarded through payment in the futureFuturity there is always a future time involved regardless of whether it is an hour, a day, a month or even years. RiskThe risk is involved would be the uncertainty faced by the creditor, whether he gets paid in full, in part or not at all. The risk could be minimized when the loan is secured.Reporter: Mariela Eusebio
Foundations of A System of Credit
TrustCreditors must have absolute confidence in the personal character and in the ability, as well as willingness, of their debtors to accept, honor and settle their obligations.Proper facilities must exist for performing credit operationsthe grant of credit entails the use of documents to evidence the existence of credit transactions between the creditor and debtor seeking to establish their obligations to one another.Reporter: Mariela Eusebio
the money standard must be stableif money is subject to frequent and wide fluctuations as to cause its purchasing power to become uncertain at any time after a contract is entered into by the contracting parties, the creditors will necessarily feel reluctant to lend money knowing that the purchasing power or value of the money that will be paid to them may not be equal to the value has been advanced, whether money, services or goods.

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