Types of Credit

The principal classes of credit are as follows:

(1) mercantile or commercial credit, which merchants extend to one another to finance production and distribution of goods.

(2) investment credit, used by business firms to finance the acquisition of plant and equipment and represented by corporate bonds, long-term notes, and other proofs of indebtedness.

(3) bank credit, consisting of the deposits, loans, and discounts of depository institutions.

(4) consumer or personal credit, which comprises advances made to individuals to enable them to meet expenses or to purchase, on a deferred-payment basis, goods or service for personal consumption.

(5) real-estate credit, composed of loans secured by land and buildings.

(6) public or government credit, represented by the bond issues of national, state, and municipal governments.

(7) international credit, which is extended to particular governments by other governments, by the nationals of foreign countries, or by international banking institutions, such as the International Bank for Reconstruction and Development.