Economy, asked by sreehar3059X, 6 months ago

explain how credit play a vital and positive role for development ​

Answers

Answered by natasamina336
1

Explanation:

There are two positive and negatives role of credit. credit helps to meet the Working capital needs of production. ... in the case of high risk , credit pushes the borrower into a debt - trap . that is credit in this case pushes the borrower into a situation from which recovery is very painful....

Credit helps people to meet the ongoing expenses of production, complete production on time and thereby increase their earnings. Hence, it plays a vital and positive role in a country's development.

Credit allows individuals and organizations to purchase items without having to make an immediate payment in cash. Banks use this system of credit to make loans. The more cash the bank has on hand or in reserve, the more money it can loan to borrowers.

Credit' refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. Credit plays a vital and positive role as: (i) Credit helps people from all walks of life in setting up their business, increase their income and support their families.

Answered by Itzalien19
12

Credit allows individuals and organizations to purchase items without having to make an immediate payment in cash. Banks use this system of credit to make loans. The more cash the bank has on hand or in reserve, the more money it can loan to borrowers. The amount depends on the number of loans obligated to customers and the creditworthiness of the borrowers. When credit improves, the amount of cash a bank has to hold in reserves decreases, which in turn increases earnings.

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