Under credit (derived from latin credere "believe, trust" and Latin creditum "that in good faith entrusted"; English credit or English loan = loan ) is generally understood as the transfer of ownership of cash ( banknotes , coins ), scriptural money or reasonable things from Lender for the purpose of temporary use by the borrower , who agrees to a future repayment and often to a consideration in the form of interest .
The term credit is a generic term for a large number of economic cases in which the debtor is released from the obligation to provide his service immediately. Therefore, the term credit must not be narrowed to the bank loan, because credit is already granted in many other everyday situations, even if this is often not perceived by those involved. Every advance payment in mutual contracts is a loan, because someone makes advance payments in the trust that the other side can and wants to fulfill its contractual obligations. The constituent characteristic of a loan is the time difference that occurs between the time of performance and the time of consideration. This can also be a question of loans that consist of the provision of reasonable items (loans in kind).
Etymologically , the term credit has only existed since the blossoming capitalism of the 19th century, before terms such as loan , locatio conductio , nexum or mutuum were used . The “Creditum” was a debt and not a loan and arose with every claim . That is why today every claimant is called a creditor in foreign languages ( English creditor , French créditeur or Italian creditore ). The Italian Civil Code (CC) called any claim Italian credito (Art. 1992 CC).
The simple beginnings of the credit system are already around 3000 BC. To be found in Mesopotamia . In the course of the development of a simple payment and credit system, grain seeds were loaned to farmers, which only had to be returned after the harvest plus interest. In ancient Greece as well as in Lydia emerged in the course of the 7th century BC. The first minted coins. This allowed the first money exchange and lending business to be established, which would nowadays be referred to as loans.
In Greece a more advanced form of credit eventually developed. The fact that freed slaves had the same legal status as immigrated Metöken , they were not allowed to acquire land or work in agriculture, which is why many of them worked in the monetary sector. In the 3rd century BC Chr. It was a freed slave named Pasion , of the Athenian port of Piraeus deposits under custody and these continued to invest by appointment. He demanded between 10 and 12% interest from his debtors.
In Roman law , the basic type of credit transaction was the informal mutuum (loan), the transfer of a sum of money or other reasonable items ( seeds , wine , oil ) with the agreement to return the same amount or amount of money or goods. Mutuum's devotion established the obligation to return it, so that there was a real contract . In the Gaian institutions , reference is made to a senate resolution , the " Senatus consultum Macedonianum " from AD 47, which speaks of Macedo lending money to insecure debtors - an early form of dubious claims . As a rule, no loan interest was charged because it was not covered by the Mutuum, but a special agreement was required for the interest payment . The Romans knew interest well and they studied it very carefully. The Early Republican Twelve Tables Act already set a maximum limit for interest. At least since the Roman emperor Constantine the Great (ruled from 306 to 337), credit transactions at an interest rate of 12% were common.
The medieval economy required extensive consumer loans due to the general lack of cash . The “Borg purchase” - today's commercial credit - was practically the rule in the Middle Ages . The Christian prohibition of interest was a hindrance to lending . Pope Alexander III explicitly allowed the Jews to trade in interest in 1179, but the IV Lateran Council of 1215 required the Jews to make amends at high interest. The resulting success of the Jews in the credit business led the Franciscans in 1462 to set up credit coffers from Christian money in order to free the Christians “from the clutches of Jewish usurers”. In 1397, Cosimo de 'Medicis Bank granted loans to the Florentine merchant Niccolò Niccoli, among others .
The first evidence of a systematically secured loan in the form of the Lombard loan can already be found around the year 1400, when merchants granted loans to feudal lords and nobles in return for pledging and thus contributed to the rise of northern Italian trading houses. The Florentine banking house Compagnia dei Bardi , which had a business relationship with the English royal family in the 14th century and was sold to Edward III in 1344, should be emphasized . Had awarded 900,000 gold florins .
As early as 1530, Jakob Fugger granted the future German Emperor Ferdinand I a loan of 275,333 guilders . In 1609, paper money was also established in Europe by the Dutch, which, after the population initially distrusted paper notes, led to flourishing lending business. This development had a lasting effect on the credit system and thus also on trade. As early as the Middle Ages, traveling merchants received letters of credit on deposit of money with a banker , on presentation of which parts of the deposited money were paid out on the journey and the risk of robbery while traveling could be reduced. This was made possible by the close family ties of the early bankers .
Henry VIII. Legalized the interest payment in 1575, but only with the relaxation of canonical interest prohibition and its final repeal in 1741 legal lending rate could be required. As a result, the commercial lending business spread. The famous Hamburg bank founded in 1619 was not yet a credit bank , but only a payment bank . In the case of banks, there was now a change in credit policy when, from 1795, credit was also granted to townspeople. In 1856 the first large modern credit banks were established in Hamburg, the Vereinsbank Hamburg (August 11, 1856) and the Norddeutsche Bank (October 15, 1856).
With the entry into force of the BGB in January 1900, a uniform loan law was created, albeit only fragmentarily with regard to its economic importance (Sections 607–610 BGB old version). Most of the open legal questions - such as the lack of a legal definition of the term loan - had to be clarified through case law and literature. The legislature considered the term loan to be naturalized in legal life, so that a definition seemed dispensable. The BGH . "Contractual legal obligation contract for the payment or free use of capital on time" meant by it in April 1962 was in January 1932, came between the central associations of the banking industry to the so-called master agreement with a lending rate - and borrowing rate agreements, which in March 1965 by the Interest Ordinance was replaced. Both should ensure the profitability of the banks by setting uniform and fixed interest rates, but also protect customers by imposing maximum interest rates on loans. When the interest rate regulation entered suspended in April 1967 and have been lending rates of market development left.
In the years of reconstruction after the Second World War, the importance of the credit business with private customers increased. The credit institutions granted credit for the purchase of durable goods, the consumer credit , which had to be repaid with a fixed installment agreement within a maximum of 72 months. The loans were mainly based on the customers' salaries; In addition to an assignment of wages and salaries , the transfer of ownership of motor vehicles by way of security became common. In order to be able to monitor the creditworthiness of the borrowers, the lenders report the granted installment loans to the Schufa and in turn receive feedback if borrowers take out further loans from other banks.
From 1970 onwards, almost every employee had a current checking account for incoming salaries and payments . This gave the banks a good insight into the income situation and granted overdraft facilities in the amount of several monthly incoming salaries.
The Law of Obligations Modernization Act of January 2002 dispensed with the term credit, which served as a generic term for monetary loans, deferred payments and other financial aid; the manifestations of credit have taken its place. It changed the loan contract from the previous real contract to a consensual contract , so that the contract is already concluded through a party agreement and not only through the payment of the loan. This means that the payment as a fulfillment of the contract no longer has any constitutive effect.
The economic concept of credit is too broad for legal implementation, so that from a legal point of view, the loan represents only one type of credit business . The term credit is used widely in law. For example, , , Paragraph 2 AktG regulate the granting of loans to members of the corporate bodies of the AG , GmbHG regulate the "granting of credit to shareholders" of the GmbH, sentence 2 HGB does not see any objection to advance action in the credit order by the businessman in front. The BGB knows the guarantee-like loan order in BGB, but avoids the term credit in the legal definition and speaks of loans. The credit risk is codified in BGB, No. 8 BGB requires the approval of the court to borrow money on the ward's credit; but in the central regulation of credit as a contractual obligation in the law of obligations , it uses the term "loan". It differentiates between loans in cash and loans in kind. In para. 1 BGB the mutual obligations for the money loans included, after which the lender is bound by the loan agreement to provide the borrower a sum of money in the agreed amount available. The borrower, in turn, is obliged to pay any interest owed and to repay the loan made available when due. However, the law of obligations does not consistently apply the term loan, but speaks of the "overdraft" in BGB. In accordance with Paragraph 1 of the German Civil Code, the loan agreement in kind obliges the lender to provide the borrower with an agreed defensible item. The borrower is obliged to pay a loan fee and, when due, to refund items of the same type, quality and quantity. In both cases, the BGB is content with listing the rights and obligations of those involved in the loan agreement without defining it.
Loans are surrender of property or money for a time. Of the rent , the lease and the loan all forms of loans differ in that the tenant, lessee and the borrower always only direct owners are and have to give back the same subject. Therefore, they are only allowed to use the rented, leased or loaned property (advantages of use ; in the case of lease, also drawing the fruit from the mother's property) The borrower receives or retains full legal control through ownership of the amount of money credited or the goods. As a rule, the borrower is also not obliged to deal with the money or the goods in a certain way towards the lender, unless contractual arrangements have been made in this regard.
Lenders in the non-banking sector
The supplier grants the customer a credit sale and shall pay in advance when he release the goods to the customer without train to train to collect the purchase price. In addition to the installment business, this also includes the unregulated credit for “ leaving a cover letter ” to the buyer in retail ( beer coasters ) as an interest-free purchase price deferral. The buyer, in turn, grants the supplier credit if he makes down payments or advance payments without receiving the goods immediately ( customer credit ). Therefore, supplier credit and customer credit are also credits. Even employees usually have to perform their work first before the employer pays wages or salaries for it ( sentence 1 BGB: “work first, then money”). In the case of a work contract , the contractor has to pay in advance, as his remuneration is only due after the work has been performed ( (1) BGB). The regulation of VOB / B is also based on the contractor's obligation to perform in advance for work contracts.
Loans from non-banks within a group are widespread as "intra-group financing", when parent companies make loans available to their subsidiaries or vice versa. According to (2) B II and III of the German Commercial Code (HGB), they are to be shown separately in the balance sheet as “Receivables from affiliated companies” . Also natural persons as shareholders of their company can credit in the form of shareholder loans provide.
Other lenders in the non-banking sector include pawnbrokers , loan sharks and natural persons, who often act as substitutes for credit institutions from which borrowers cannot obtain credit. While pawnbrokers and loan sharks act as commercial lenders, natural persons are not commercially active; Relatives or friends usually grant loans as a favor.
The most important lenders of the economy are the credit institutions . That is why credit is usually associated colloquially with bank credit. According to Karl Friedrich Hagenmüller , the essence of bank credit consists in “the fact that the lender performs a service in the present and thus becomes a creditor , while the borrower, as the debtor , undertakes to pay the consideration in the future”. The Banking Law delves into the loan term as the main banking business . It must be taken into account here that financial innovations lead to new credit products that can only be captured with the broadest possible definition. The bank regulatory credit term .. 1, No. 2 para KWG divides the lending business in the basic types of lending money ( cash loans ) and Kreditleihe ( acceptances ), mentions the - not more usual - the purchase of change , and checks as discount store (no. 3) and the guarantee business (No. 8). In (1) KWG, the term “credit” is defined exclusively for loans in the millions and includes balance sheet assets , derivatives (with the exception of standstill obligations from purchase options) as well as the guarantees and other off-balance sheet transactions . In sentences 2 and 3 of this provision, this rough definition is substantiated by individual balance sheet items . For loans to take KWG another credit definition.
The capital adequacy regulation (abbreviated CRR from English capital requirements regulation ), which has been in force since January 2014, speaks of credit risk and risk positions instead of credit and also focuses on advance payments. Art. 5 No. 1 CRR describes a risk position as an "asset item (asset) or an off-balance sheet item". According to Art. 379 No. 1 CRR, advance payments are made if a credit institution has paid for securities , foreign currencies or goods before it has received them or has delivered securities, foreign currencies or goods before it has received their payment. In the case of cross-border transactions, advance payments are made if at least one day has passed since payment or delivery. Large exposures are regulated in Art. 392 ff. CRR and are limited to 10% of an institution's eligible capital .
All economic entities such as other credit institutions ( interbank loans ), central banks ( central bank money ), companies ( investment loans ), states , municipalities and other public authorities ( municipal loans ) and natural persons ( consumer loans , overdraft facilities ) can be considered as borrowers from credit institutions .
|Differentiation of the types of credit according to:|
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- One of the most common forms of credit is the loan . Usually a fixed repayment agreement is made between the parties. In the absence of such, repayment of the loan value plus interest is due if the loan has been terminated by one of the parties . The loan value is usually posted to a special account of the borrower and credited to the current account when it is paid out. In the case of annuity loans , the rate includes not only interest but also a repayment component, which increases proportionally over the course of the repayment.
- Cash advances are granted through a line of credit on a current account or a separate account (e.g. overdraft facilities , Lombard loans ). The credit line is usually granted for a limited period of time, but can be used during the term to a fluctuating amount through corresponding payment transactions. Apart from the overall time limit, there are no specific repatriation agreements. The cash advance is usually designed as a revolving credit ; this allows the loan to be drawn again up to the full amount of the credit line granted, even in the event of a short-term repayment.
- Legally, both forms of money lending are loans. Guarantee credits , letters of credit and acceptance credits are referred to as credit lending . Here, the bank, with its own creditworthiness , enables the borrower to receive money or services from third parties.
- Framework credit agreements can be drawn down as a cash advance or partially as a guarantee, in the form of letters of credit or loans, depending on the (mostly operational) requirements of the borrower.
- As mortgages loans are designated to be used for the purchase or construction of real estate. The repayment is usually made through annuities over a long period of time, 30 years is common. As collateral are mortgages as mortgage or mortgages used on the financed object. Payment is usually made according to the progress of construction.
- Securities lombard loans are loans that are granted against pledging of securities ; here there are usually fixed rules for lending securities.
- Guarantee loans are credit lines for the acquisition of guarantees or warranties about the payment bond , performance bond , rental guarantee , performance bond or customs guarantee .
- Working capital loans are cash advances for financing of working capital, which are often granted as credit lines on current accounts. As a rule, they are designed as revolving loans and allow full utilization again after reduction. In addition to the interest, loan commissions can be claimed from the lender for unused loan portions.
- Goods financing or cash advances are cash advances that are usually posted to special accounts and are only granted with a final maturity at short notice.
- Of structured finance banking products is spoken at complex, composed of several elements when more agreements are as agreed to limit future interest rates or rescheduling agreements for subsequent periods contracted along with the actual credit.
- Borrower's note loans are loans that are granted partly by banks and partly by other investors. The line between companies to raise capital is fluid here.
- Debt Loans and Acceptance Loans are a financing instrument in foreign trade finance . Here banks assume liability for bills of exchange through acceptance and improve the creditworthiness of the person concerned through their joint liability.
- Roll-over loans are fixed-interest loans in which the interest rate is not fixed for the entire term, but is adjusted to the respective market conditions at contractually agreed intervals.
- Stand-by loans ( stand-by loans ) are lines of credit that are used to secure the liquidity of a company and are generally not used.
- Municipal loan is the collective term for all long-term loans to the federal states , districts or municipalities .
- Cash loans are used to provide municipalities with short-term liquidity.
From loan application to loan disbursement
- Customer loan application
- Check of creditworthiness
- Checking the creditworthiness (also called economic creditworthiness)
- Examination of the lending documents
- Examination and evaluation of the loan collateral offered
- Conclusion of the loan agreement
- Provision of loan collateral
- Provision of the loan (taking into account the disbursement requirements ), e.g. B. by crediting the current account .
Securing the loan
When lending, banks value the borrower's long-term ability to generate interest and repayments from current income (for companies: cash flow ). In the case of medium and long-term loans in particular, it may be necessary for a security provider to provide collateral .
- Personal security : in particular guarantees , letters of comfort ;
- Property security : in particular mortgages , pledging of bank balances or securities .
In addition to the general law of obligations, the granting of credit is regulated by special laws.
Safeguards for the borrower
There were already efforts in the Middle Ages - despite the Christian interest ban - to limit the interest, i.e. the payment for the granting of credit. Examples can already be found in the Middle Ages for Genoa (12.5%) or the instructions of Emperor Friedrich II with 10% ( albeit for Jews ).
- In Germany and Austria, an ordinance for the uniform calculation of the effective annual interest rate created a comparability of credit offers for consumer loans ( Price Indication Ordinance ).
- In Switzerland, the Consumer Credit Act (January 1, 2003) set a maximum interest rate of 15% p.p. for certain types of credit. a. and a right of withdrawal is enshrined in law.
- Lending is regulated across the EU by the Consumer Credit Directive of 2008. It affects almost all classic consumer loans that have a defined term.
Minimum requirements for risk management (MARisk)
With the publication of Circular 18/2005, the Bundesbank specified the application of the Basel II guidelines for German credit institutions. These prescribe the procedures for a risk assessment for loans using an evaluation or so-called “rating” procedure and issue regulations for the funding of loans.
Furthermore, the organizational separation between the front office (lending) and risk management is regulated. Risk management must meet a number of minimum requirements.
When checking creditworthiness , credit institutions follow general financing rules , including the golden banking rule . When granting a loan, every lender takes on a credit risk, because the contractual repayment together with interest is in the future and is therefore subject to uncertainty . Uncertainty means that the potential impact is known (total or partial loan default ), but lenders do not have certain information about the likelihood of occurrence . They must assess this credit risk by means of a suitable analysis of the borrower ( balance sheet analysis for companies, municipal annual financial statements analysis for regional authorities, income and asset analysis for natural persons) and give it a rating . The credit risk can be mitigated or eliminated entirely by means of loan collateral.
Central banks as lenders
Central banks are available as lenders for the commercial banks; they offer the pledging of securities and loan claims of the commercial banks, which in return are credited with central bank money and can dispose of cash. The interest rate to be paid for these loans is the base rate of the European Central Bank (until 1999: discount rate ), with the same amount of interest on the credit balances of the commercial banks at the central bank. Under the marginal lending facility, commercial banks can request cash and central bank money at any time and without limitation in return for pledging assets from the central bank.
When paying with credit cards such as Diners Club , Visa , American Express , Mastercard , the customer is usually granted an interest-free credit of one month. In this case, the credit fees are paid by the companies that accept the cards. When paying with debit cards (as with EC , Maestro and V Pay etc.) there is no credit, but the amount is immediately debited from the current account.
“Having credit with someone” also means enjoying confidence that one is solvent and therefore creditworthy . On the contrary, “gambling away the credit” means making yourself untrustworthy. This economic appreciation also includes business honor. If someone endangers the credit of another by asserting facts that contradict the truth , he is liable for the resulting damage according to Paragraph 1 BGB ( credit risk ) and can make himself liable for defamation according to StGB .
A sufficient supply of credit is of great importance for the functioning of an economy . For companies, credits are - in addition to equity - an important source of financing investments and ongoing business activities ( current assets ). With credit, consumers can bring their consumption forward, i. H. Acquire goods before they have made the necessary money. The public sector finances part of its tasks through loans - often in the form of bonds . This leads to national debt .
In economic crises , the supply of credit is often disrupted due to the economic agents' lack of trust in one another. Central banks then try to improve the supply of credit and money through their monetary policy .
As part of their risk transformation, the banks have the task of supplying the economy with loans in order to equip the cycle of goods with the required amount of money (see also credit theory ). The quantity equation provides clues for the size of this money supply.
- As financial intermediaries, credit institutions act as the interpersonal intermediary between their savers and borrowers, whereby they also balance out the different maturity interests of market participants as part of maturity transformation .
- The granting of bank credit increases the money supply ; Repayment reduces them. In a minimum reserve system, this applies not only to central banks, but also to commercial banks . This process of creating additional book money is called deposit money creation . The creation of a new credit relationship by banks is called credit creation.
The credit market is the conceptual summary of all sub-markets of supply and demand for credit. A loan is offered if someone cannot use their existing money better. The demand for credit, in turn, is based in particular on expectations about the productivity of investment projects (investment credit ), liquidity equalization (working capital credit ) or anticipation of consumption that will only be possible in the future through savings (consumer credit). On the balance sheet as assets, credit represents the counterpart to money (as liabilities of the central bank), but it also includes natural credit relationships such as supplier credit. On the primary market , credit institutions, insurance companies, other economic entities ( states ) act as suppliers and buyers, while market participants on the secondary market are pawn shops , credit intermediaries , loan sharks and the loan trade .
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