Economic Activities of Elmina, Essays for Development Economics. University of Ghana

Economic Activities of Elmina, Essays for Development Economics. University of Ghana

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Credit (from Latin credit, "(he/she/it) believes") is the trust which allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead promises either to repay or return those resources (or other materials of equal value) at a later date. In other words, credit is a method of making reciprocity formal, legally enforceable, and extensible to a large group of unrelated people.

The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower. Adam Smith believed that barter preceded credit in history, but most recent anthropological research[4] proved otherwise. Barter mostly took place between those individuals who lack trust with one another e.g. hostile or unknown tribes usually made their transactions via barter. On the contrary, members of the same tribe mostly settled their transactions in credit\debt.

The term "credit" was first used in English in the 1520s. The term came "from Middle French crédit (15c.)”belief, trust," from Italian credito, from Latin creditum "a loan, thing entrusted to another," from past participle of credere "to trust, entrust, believe"." The commercial meaning of "credit" "was the original one in English (creditor is [from] mid-15c.)"

1. Credit (def. 2c). Merriam Webster Online. Retrieved 5 March 2015. 2. Simkovic, Michael (2016). "What Can We Learn from Credit Markets?” Proceedings of

the 93rd Annual Meeting of the American Law Institute. SSRN 2782844  3. O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper

Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 512. ISBN 0-13-063085-3. 4. David., Graeber, (2011). Debt : the first 5,000 years. Brooklyn, N.Y.: Melville House.

ISBN 9781933633862. OCLC 426794447.

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