Presented by: Jackie Tubia Beatingo

Janice mondejar
Vebian Balanza
 INTRODUCTION

In the various stages of economic development, not a few former

underdeveloped nations have achived higher levels of stability and

growth in both economic and social endeavors. It is most evident that

the credit system, among other things, has been instrumental in the

development and progress of nations. Needless to say, that he rate of

economic growth pf a country depends on the availability of sufficient

credit, and of course the proper use of credit.

THE DEVELOPMENT OF
CREDIT
The credit system reflects in many ways the degree

of economic and social values and institutions

pervading in a particular society at a given point in

time. Credit being a tool of development and

progress of people and society, has, since ancient

times to the present, served the specific and

relevant needs of the economy.

During the initial years of Spanish rule, free trade was
encouraged. The goods of the Far East were marketed to
America through Manila and then Acapulco, Mexico. Manila
was still a center of trade and commerce in the orient.
A product of mercantilistic policy in the Philippines was
the Galleon Trade. This was the Manila-Acapulco trade. It
was called galleon trade because it was carried on by
transpacific galleons. Such trade was government
monopoly.
Most of those who participated in the galleon trade
secured their loans from the obras pias.This were the fore-
runners of the banking institutions in the Philippines. The
funds of the obras pias were donated by the religious
orders.
The credit systems were only a chosen few
better banking and credit system to promote economic development,
especially in the rural areas.

1915 1916
1908

the first The Rural Credit

Philippine
National Bank was
agricultural Law was enacted
established, to
bank for the to complement remedy the short
benefit of the agricultural coming of credit
the farmers. bank. system.

UNDER THE REPUBLIC

Philippines became republic
July 4, 1946
The Rehabilitation Finance Corporation
was established, to provide credit
facilities for the rehabilitation of October 29, 1946
agriculture, commerce and industry. It
also provide in the reconstruction of establishment of the Central Bank in the
war-damaged properties
1949 Philippines.

the Agricultural Credit and Cooperative

Financing Administration (which later
became Agricultural Credit Administration 1952
whose functions have been taken over by
Land bank in 1982)
the Rehabilitation Finance Corporation
1958 became the Development Bank of the
Philippines
BASIC CONCEPTS OF CREDIT
The word “Credit” came from the Latin word “creditum” which means trust.
Credit refers to the ability to acquire something of value, such as goods,
services, securities or money, at the present time in return for a promise to
pay at a future time.
1. Creditor – who provides the thing borrowed
2. Debtor- who received it and assume the obligation to pay.
Obligation: Debt vs. Credit
Credit if it refers to a person or institution to whom the future payment is to be made.
Debt if it refers to a person or institution who is obliged to pay in the future.
Credit Instrument – refers to paper which contains in writing the obligation of the debtor
and the right of the creditor.
Credit system – this includes credit, credit instruments, credit institutions, laws and
customs on credit lending and collection.
 Trust
implies that the creditor or banker
has faith in the ability and
willingness of the debtor to fulfill
his obligations, be it an individual,
corporation or government.
Time of payment
the borrower has an obligation to
pay his debt I a definite time or
date.
Risk
the ability of the borrower to fulfill
his promise to pay may be
reduced by circumstances
beyond his control such us natural
calamities and personal
misfortune.

BASES OF CREDIT
Character – refers to personal integrity of the borrower.

Capacity – this can be measured by the managerial ability of the

borrower, that is, his ability to use wisely and efficiently his loan.

Capital – this refers to resources owned by the borrower, such as

properties.

Collateral – usually, the title of a land is required as a security of loan

Condition – the conditions affecting the geographical location, the

enterprises and the general economy.
 SOURCES OF CREDIT INFORMATION
Internal Records
data which are in the files of the bank.
Applicant information
the best source of information is the applicant himself.
Business reference
upon the request financial institutions give information among
themselves regarding the credit standing of loan applicants.
CB Credit information system
Central Bank of the Philippines provides credit information to
banks (except rural banks) who which to obtain information
about their applicants.
Other sources
business magazines, trade journals, government business
reports and other business section of the news paper are used
by financial institution to supplement their credit information.
 USERS OF CREDIT
Consumers Businessmen Government

Many people borrow money, especially the poor,

most businessmen, if not all, finance their poor and developing nations lack sufficient
for the purchase of essential goods and services
investments through credit. funds to finance their numerous development
like food, shelter, heath and education.
programs.
 SUPPLIERS OF CREDIT

Credit
Banks
cooperatives
the banking system provides loans
to individuals, firms, and these credit associations
government.
grant loans to their
Credit cooperatives – these credit
associations grant loans to their members for productive
members for productive and and providential
providential purposes. purposes.

Pawnshops Unlicensed Other Institutions

money lenders
many financial problems
of students, poor this type of creditors have this are other financial
housewives and small become popular since institutions which
employees are saved or ancient times to the supply credit.
reduced by pawnshops. present.
Economic function – through
credit more goods and
service acquired.

Social function – people

enhance their social standing
through their economic
resources, such as money,
land, cars, houses and other
prestigious property.
Mt, Carmel
College of San
Francisco
Agusan Del

09093576241

jackiebeatingo6@gmail.com