Bank Credit

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Bank Credit

 

monetary loans granted by banking institutions.

Under capitalism, bank credit is one of the forms of loan capital. It may be a sum granted for the temporary use of capitalist enterprises and private parties in exchange for a pledge of physical assets as security, although a pledge is not always part of the agreement; it may also take the form of bank purchase of securities. A distinction is made between long-term and short-term bank credit. Non-Soviet bank statistics single out such categories of loans as loans to commercial and industrial companies, loans to agriculture, consumer loans, and loans to stock-brokers and dealers. For example, in the aggregate balance of American banks for June 1970 credit transactions were distributed as follows: the banks’ loans per se accounted for 70 percent of the banks’ total income assets of $424.2 billion, 30 percent being invested in state securities and state and local bonds. Industrial and commercial companies accounted for 37 percent of the total sum of loan indebtedness, farmers for 4 percent, consumers for 21 percent, and real estate for 23 percent. Today, the main share of bank credit is used by large monopolistic enterprises both directly, in the form of loans under very advantageous conditions, and indirectly, through expansion of consumer and mortgage credit, which leads to the more rapid sale of their goods and services.

Under socialism, bank credit is an important instrument for expanded reproduction and for the promotion of the planned circulation of the fixed and working funds of socialist enterprises. The primary form of bank credit in the socialist countries is direct, planned, and designated credit. Loans are issued in observance of the following credit principles: the planned and designated direction of credits; the use of physical assets as securities; the necessity of payment for credit; and repayment at a definite time. Loans are distinguished by time period (long-term and short-term loans), by sectorial structure (loans in industrial enterprises, agriculture, transportation and communications, and trade), and by purpose or designation (loans for commodity and physical assets and seasonal expenditures, loans granted on the basis of en route payment documents, and loans to supplement working capital). On Jan. 1, 1973, the total enterprise indebtedness just of short-term loans of the Gosbank (State Bank) of the USSR was 111.8 billion rubles. More than two-thirds of all loans were given to enterprises in industry and trade; more than three-fourths of all loans were given for commodity and physical assets.

V. M. USOSKIN

References in periodicals archive ?
The increase in the amount of bank credits in rupiah was also prompted by falling value of the local currency against the U.S.
Table - 3 Developments of bank credits by currencies, 1997 - 2000 (Rp billion) Year Rupiah Exchange Total rate 1997 261,534 116,600 378,134 1998 Qrt IV 313,118 174,300 487,426 1999 January 312,781 191,501 504,282 February 313,828 186,110 499,938 March 231,423 135,120 366,543 April 180,541 106,708 287,249 May 173,863 103,739 277,602 June 165,340 85,922 251,262 July 162,514 338,176 249,428 Augusts 159,598 97,977 257,575 September 156,486 106,776 263,262 October 153,881 89,098 242,979 November 152,441 94,843 247,284 December 140,527 84,606 225,133 2000 January 136,822 89,168 225,990 February 136,492 92,253 228,745 March 130,875 92,360 223,235 April 130,637 98,140 228,777 May 133,719 104,210 237,929 June 134,654 105,481 240,135
By the end of December, 1998 bank credits totaled Rp587.6 trillion.
Table - 4 Developments of bank credits by status, 1998-2000 In special Less Year Liquid watch liquid 1998 June 468.0 131.9 108.5 Dec.
The increase in the amount of bank credits is expected to contribute to financing small and medium enterprises.
That year the 13 provinces of eastern Indonesia received Rp 11.7 trillion in bank credits. This was as against public fund deposited in bank of Rp 11.8 trillion.
South Sulawesi received bank credits amounting to Rp 3.4 trillion by the end of July 1997 -- the largest in eastern Indonesia.
Table - 3 Amounts of bank credits and pubic fund in bank deposit in 13 provinces of eastern Indonesia, June 1997 (Rp billion) Credit Public Surplus/ Provinces disbursed fund deficit Maluku 997 939 58 Irian Jaya 1,028 1,211 -183 East Timor 142 324 -182 West Nusa Tenggara 786 725 61 East Nusa tenggara 370 723 -353 North Sulawesi 1,355 1,244 111 Central Sulawesi 522 595 -73 South Sulawesi 3,435 3,774 -339 Southeast Sulawesi 338 363 -25 West Kalimantan 2,408 2,004 404 Central Kalimantan 565 684 -119 South Kalimantan 1,540 1,456 84 East Kalimantan 2,023 3,030 -1,007 Total 15,509 17,072 -1,563 Other province 324,519 298,932 25,587 Total 340,028 316,004 24,024
Speculations, involving large bank credits for land procurement, has been encouraged by the high increase in the price of land after being developed.
In December, credit categorized as "smooth" made up 91.21% of the total bank credits. The percentage dropped to 90.77% in April 1997.
Table - 1 Growth of bank credits in service sector, 1992 - 1997
Table - 3 Growth of bank credits by sectors, 1992 - 1996