Bank Credit

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DEFINITION of 'Bank Credit'

The amount of credit available to a company or individual from the banking system. It is the aggregate of the amount of funds financial institutions are willing to provide to an individual or organization.

BREAKING DOWN 'Bank Credit'

A company or individual's bank credit depends on both the borrower's capacity to repay and the overall amount of credit available in the banking system. Bank credit for individuals expanded enormously over the past 50 years, as consumers grew accustomed to having several credit cards. Some observers were predicting that the financial crisis in 2008 could mean a return to those earlier years, when credit, although relatively cheap, was difficult to obtain, especially for those with poor credit histories.

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RELATED FAQS
  1. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  2. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  3. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  4. What role does a correspondent bank play in an international transaction?

    A correspondent bank is most typically used in international buy, sell or money transfer transactions to facilitate foreign ... Read Full Answer >>
  5. Do negative externalities affect financial markets?

    In economics, a negative externality happens when a decision maker does not pay all the costs for his actions. Economists ... Read Full Answer >>
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