Peter Jan S.

Taňa FINMN 6- A

BSBA FINMN-3

Choose 1 function of credit. 

 Increase in spending

Explain your chosen function. 

 Credit causes people to spend more, which raises the economy's revenue
levels. As a result, GDP (gross domestic product) rises, resulting in quicker
productivity development. When credit is utilized well, it contributes to
economic growth and revenue.

Choose one company that practices your chosen function. 

 Development Bank of the Philippines (DBP)

 Explain how does the company uses the function that you chose. Give Examples. 

 I think the company who uses this function are Banking Companies, like
Development Bank of the Philippines (DBP). As far as I know, Development
Bank of the Philippines plays a significant role in credit growth in an
economy. This is due to the fact that their major business for example,
lending money to consumers in exchange for interest payments. DBP’s credit
demand rises as the economy improves and customers become more willing
to spend. Especially when they provide low interest rates, people are willing
to borrow money to make big purchases like cars and houses. This is
beneficial to DBP since it results in more loans being issued and an increase in
interest income. Furthermore, consumer increase spending is one of the
components of Gross Domestic Product (GDP), which is regarded as a
measure of economic production. As a result, increased consumer spending
immediately contributes to a rise in GDP. That’s why, consumer loans
contribute greatly to economic growth by allowing people to purchase
beyond their incomes.