Chapter 1: Introduction

Abstract

Credit, if managed prudently, can build an economy, produce an efficient allocation of capital and wealth and bring prosperity. It is an absolute must in the financial system, affects everyone and drives the global economy. Credit accommodates one of the main functions of financial markets, that of channelling funds from savers to spenders; it allows funds to move from people that lack productive investment opportunities to the ones that have such opportunities. Credit allows individuals to finance their needs of acquiring a house, car, furniture, etc., assists companies to start or expand their business, and enables governments to finance public interest projects such as utilities, schools, roads etc.