CHAPTER

CREDIT

Lecturer: Assoc. Prof., Ph.D. DANG VAN DAN

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 CONTENT

1. FOUNDATION & DEVELOPMENT OF CREDIT

2. ESSENCE OF CREDIT

3. CLASSIFICATION OF CREDIT

4. ROLES OF CREDIT

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1. FOUNDATION & DEVELOPMENT OF CREDIT

1.1. DEFINITION

Credit is the temporary transfer of a quantity of value (in the

form of currency or asset) from the owner to the user on the

basis of a return of a larger amount of value than the original

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I. FOUNDATION & DEVELOPMENT OF CREDIT

2. FOUNDATION OF CREDIT

Derived from the nature of the capital

cycle in the economy

Derived from the demands for investments

and spending in the economy

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2. ESSENCE OF CREDIT

A temporary capital transfer on the basis of trust

A temporary capital transfer on the basis of

repayment

A movement of loan capital

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3. CLASSIFICATION OF CREDIT

3.1. TRADE CREDIT

Trade credit is a credit relationship between businesses
(business-to-business) in the form of goods purchases and sales,

usually in the short term.

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3. CLASSIFICATION OF CREDIT

3.1. TRADE CREDIT

Classification of commercial papers

Based on drawing Based on transfering

Commercial paper non-

Bill of nominal bill
exchange
Commercial paper
Promissory nominal bill
note
Commercial paper sight
bill
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3. CLASSIFICATION OF CREDIT

3.2. BANK CREDIT

Bank credit is a credit relationship between banking

institutions and other entities in the economy.

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3. CLASSIFICATION OF CREDIT
3.2. BANK CREDIT

Credit Credit Form of Method of Characteristics

Credit term
purpose guarantee credit repayment of repayment

capital

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3. CLASSIFICATION OF CREDIT

3.3. GOVERNMENT CREDIT

Government credit is a credit relationship between the

government and other entities in the economy. The

government raises funds to meet the demands of the budget.

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3. CLASSIFICATION OF CREDIT

3.3. GOVERNMENT CREDIT

Classification of government bonds:

▪ Based on the scope of issuance

▪ Based on the term

▪ Based on the purpose of issuance

▪ Based on the methods of repayment

▪ Based on the characteristics of repayment

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3. CLASSIFICATION OF CREDIT

3.4. OTHER TYPES OF CREDIT

✓ Business credit
✓ Private credit

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4. ROLES OF CREDIT

4.1. PROMOTING THE RE-PRODUCTION PROCESS

Credit activities promote the mobilization of capital sources,

meet the demands of the capital, and force borrowers to pay

attention to the efficiency of capital usage.

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4. ROLES OF CREDIT

4.2. TRANSMISSION OF THE GOVERNMENT REGULATION

The government manages credit activities through interest

rates adjustments, lending processes, credit supply control of

the commercial banking system.

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4. ROLES OF CREDIT

4.3. IMPLEMENTING SOCIAL POLICIES OF THE

GOVERNMENT

Social supports by preferential credit policies for

disadvantaged economic areas, remote areas, policy

beneficiaries, and loans to students.

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4. ROLES OF CREDIT

4.4. EXTENDING THE RELATIONSHIP WITH OTHER

COUNTRIES

Providing credit to finance import and export activities,

receiving foreign credit capital → Promoting foreign

trade activities and other international economic

relationships.

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 Distinctions among treasury bills, treasury bonds and
investment bonds

Aspect Treasury bills Treasury bonds Investment bonds

Issuer

Duration

Issuance
purpose

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 Distinctions: Trade credit, Bank credit, State credit

Aspects Trade credit Bank credit State credit

Involving parties

Subjects

Duration

Instrument

Feature

Purpose
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