According to the definition of Baidu Encyclopedia, credit is a lending behavior between different owners that reflects a certain economic relationship, a special form of value movement based on repayment, and a credit activity in which creditors lend money and debtors repay it on time and pay certain interest. Credit can be divided into broad sense and narrow sense. In a broad sense, it refers to the general term of credit activities with banks as the intermediary and deposits and loans as the main body, including deposits, loans and settlement business. Narrow credit usually refers to the credit provided by banks, credit cooperatives and other institutions in monetary form, that is, the issuance of monetary funds with banks and other credit institutions as the main body. Narrow credit is a kind of credit granting behavior.
Credit institutions need to have a deeper understanding of the nature of credit if they want to do credit business well. As far as credit is concerned, in essence, credit refers to the behavior that credit institutions transfer the right to use funds to others with compensation within a certain period of time, and recover the principal and interest of funds to obtain income when the loan expires, which is an act of transferring the right to use funds with compensation. The most essential feature of credit lies in its compensation, that is, credit institutions lend money to borrowers, not for nothing, and borrowers have to repay principal and interest when due. For credit institutions, the borrower's failure to repay on time is the biggest risk faced by credit institutions.
For credit, we need to pay attention to the following four points:
First of all, credit is the optimal allocation of resources.
Second, credit is a service.
Third, credit business generally needs to generate value-added to be reasonable.
Fourth, the borrower's failure to repay the loan at maturity is the biggest risk we face.