Credit institutions: why they are important in the Spanish economy

Credit institutions: why they are important in the Spanish economy

January 17, 2020 Off By Ellen Billman

Credit entities are those companies that among their activities include the granting of credits to third parties. Its first definition and regulation was repealed by Royal Legislative Decree 1298/1986, of June 28, to adapt the legal norms regarding Credit Establishments to the legal system of the European Economic Community.

According to this rule, companies that have “as a typical and usual activity receive funds from the public in the form of a deposit, loan, temporary transfer of financial assets or other similar ones that entail the obligation of their return, applying them on their own account to the granting of credits or operations of similar nature ”. And also “any company or any other legal entity, other than the one stated in the previous paragraph, which issues means of payment in the form of electronic money.”

Banks, savings banks and credit unions form a subgroup within the credit institutions known as deposit institutions. This is because they are the only credit institutions with the capacity to capture deposits from the public.

Among the main functions of credit institutions are the receipt of deposits or other reimbursable funds, loans (consumer loans, mortgage loans, advance payment of invoices or factoring, purchase financing) and the issuance and management of means of payment, such as credit cards, travelers checks or letters of credit, to name a few.

The importance of credit institutions in Spain

The importance of credit institutions in Spain lies in their willingness to give liquidity to their customers, with the agreement of both parties of the conditions set out in a contract. The facilitation of money encourages consumption and, consequently, strengthens the country economy.

Credit encourages consumption, increases the business fabric and gives confidence to a country’s financial system

At a macroeconomic level, loans facilitate business operations, ensure the subsistence of many businesses and even encourage the creation of new companies. The increase in the business fabric brings confidence to the country’s financial system and, consequently, it becomes more attractive to foreign investors.

At the microeconomic level, credit institutions allow families access to goods, generally durable and of high prices, that they would not otherwise have been able to obtain. This is the case of mortgage loans to buy homes or consumer loans for, for example, cars. Both are loans granted by banks and savings banks, they are resolved in the medium and long term, and they often carry numerous paperwork and long time periods.

For credit institutions

For credit institutions

The benefit is in the interest they receive for the loan of money, previously approved by the lender and the borrower. In the negotiation it is essential the trust on both sides, since in the case of the lenders the delinquency is a real danger and in the case of the borrowers, being surprised by commissions that they cannot face without burdens.

Fortunately, the development of modern societies, and with them of financial systems, has allowed the entry into the game board of new credit institutions that operate completely online quickly and securely. They reduce waiting times and facilitate money for consumption, without asking for explanations, about the destiny of money. As Binary Lenders, which gives online credits from 750 to 5,000 dollars, to be returned within a period of between six and 48 months, in the installments that best suit your situation.