Dictionary of Banking Terms: bank credit
bank credit
- sum of bank loan and discount (loans with the interest deducted when the loan is made) extended by commercial bank and savings institutions, and a major source of earning assets in banks. Bank lending is influenced mostly through open market account of the Federal Reserve System, and to a much lesser extent through discount window lending by Federal Reserve Banks directly to banks and savings institutions. When the Fed purchases securities from dealers in the open market, bank credit is expanded; credit is drained from the banking system when the Fed sells securities.
- federal reserve credit, a credit the Federal Reserve Banks contribute to depository financial institutions, either directly, from Reserve Banks loans through the discount window facility, or indirectly, from securities owned by Reserve Banks through open market operations, plus federal reserve float.
