Chapter 4 Flashcards
Classsification of credit according to purpose
Agricultural Credit
Commercial Credit
Industrial Credit
Consumer Credit
Commodity loans
These are loans to be used in the cultivation and improvement of farmlands, or in the production of agricultural products
Agricultural Credit
Common types of agricultural loans
Time loan
Crop loan
commodity or quedan loans
This is usually a secured loan (collaterized by the farm property where the loans funds are to be used
Time loan
It finances the production of crops like rice and corn, cassava, tomatoes, and cabbage
Crop loan
This is the loan to finance the marketing of harvested crops
Commodity or quedan loans
This type of loan is also used for non-farm commodities by wholesalers or manufacturers
Commodity loans
These are loan or credit agreements for the purpose of financing the production and marketing of commodities
Commercial credit
these could be loans granted by banks to businesse or by business establishments to other business
commercial credit
are loans used to finance the construction of favtory buildings or the purchase of machinery and equipment
industrial credit
these are loan funds granted to individuals by banks, coops, department stores, credit card companies, and many more
consumer credit
the loan funds are used to purchase personal items like tx refs, cosmetics, clothes or pay education and medical expenses
consumer credit
for non farm. products, using warehouse receipts
commodity loans
Commodities or goods are either
finished product or raw materials
credit could also be classified according to maturity
short term
medium term
long term
loans are either be
secured or unsecured
it refers to a real or personal property used as collateral, usually required by the lender
security
also called as character or clean loans and signature loans
unsecured loans
a promissory note with only one signature is called
single-name paper
promissory note taht have two signatures
multi-name paper
the biggest sources of credit
financial institutions
financial institutions are either be
intermediaries and non intermediaries
is a go between, the one in the middle
intermediary
the true sources of credit are
individuals
businesses
some government entities
financial intermediaries provide the ff
pool funds
diversification
managerial competence
match short term and long term
continuing stream of earnings
transactions are handled efficiently
types of securities
stocks
bonds
treasury bills
loans
types of financial intermediaries
banks
insurance companies
pre-need companies
pension or retirement funds
investment house
financing companies
credit cooperatives
types of banks
commercial
savings bank
rural banks
is licensed by the bangko sentral and is authorized to accept deposits from the public
bank
it is in the buy and sell business
banks
is another bank created by law to. improve the philippine countryside, particularly the agricultural sector
rural banks
the major activity of insurance companies is
cash accumulation
it operates under the same cash accumulation but this one stress the major concerns of people, their childrens future and old age
pre need companies
include in thir products term life insurance that will. pay the planholders beneficiary in case of death and credit insurance
pre need companies
it collects employees contributions, mostly mandatory and on a monthly basis, from employees paychecks
pension funds
is the channeling of private funds from various individuals and businesses for investment, as capital stock, in public corporations
investment house
sells shares of stock to public
public corporation
issues or sells new shares of stock to the public in exchange for cash
issuing corporation
it would either a start up or newly established venture, or an existing corporation in need of funds
issuing corporation
also acts as financial consultants, investment advisers and brokers, and they design pension and retirement programs among other things
investment house
corporations or partnerships which are primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial
financing companies
it channels the contribution of its members into loans, mostly for farm inputs like fertilizers and farm chemicals
credit cooperatives
non financial sources of credit
appliance companies
pawnshops.
lending investors
employers
department stores
it is the seller of the merchandise and also the lender
self financing
the primary document used in pawshop
pledge
the borrower called the and who signs document called
pledgor and pledgee
terms uses in the 1st provider which is the suppliers pr raw materials and finished goods
suppliers credit
mercantile credit
terms used in commercial bank
lines of credit
revolving credit agreements
letters of credit and trust receipts
packing credit advances
terms used in the large corporations
commercial paper
terms used in the finance companies
pledge of accounts receivables
favctoring
terms used in individuals and corporation finance companies
treasury bills
repurchase
terms used in the long term
treasury bonds
corporate bonds
investment credit
bonds
equipment leaseback
in the buy and sell business this is the biggest source of credit
suppliers
this is an agreement between a commercial bank and a business specifying the amount of short term credit the bank will make available on a non guaranteed basis
line of credit
banks have limits and some limits are
single borrower limit
reserve requirements
in this arrangements, the buyers get the goods they want to purchase and the wholesaler simply records the total amount in their books or ledger without requiring the buyer to sign any document
open book credit
it is guaranteed by bank
revolving credit agreement
is issued by bank which guarantees payment to the beneficiary or payee of the LC
letter of credit
is a mode of payment that is required by a seller of goods mostly in import or export business
letter of credit
this is credit granted by bank to an exporter to finance the manufacturing of export goods
packing credit advances
is a short term unsecured debt of the government
treasury bills
2 reasons why government issue tbills
as economic measure to regulate the economy
as a means to raise funds for short term government expenditures
this is a loan collaterized by accounts receivable
pledging of AR
very rare source of credit
factoring
similar to a t bills and it is an unsecured short term certificate of debt
commercial paper
these are unsecured long term debts of the governmeny
treasury bonds
significances between t bill and t bonds
maturity
usage
how buyers make money
this is a certificate indicating that a corporation has borroweda certain amount of money and promise to pay it in the future under clear terms and conditions
corporate bonds
these are long term loans or bonds that finance the construction of favtory buildings, commercial warehouse, hotels
investment credit
in this transaction, the owner of the equipment, to generate cash usually sells it to the finance company and the owner would simply lease it back
equipment leaseback
