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Definition of

credit creation


ability of banks to lend more money the collective ability of finance companies, banks, and other lenders of money to make money available to borrowers. While a central bank can create money, it cannot create credit.

Recommended Further Reading (Term count)
  • Understanding and Forecasting the Credit Cycle—Why the Mainstream Paradigm in Economics and Finance Collapsed
    by Richard A. Werner
    Professor Richard A. Werner, DPhil (Oxon), BSc (Economics, LSE), began his academic career as Marie Curie Fellow of the European Commission at the University of Oxford. From 1997 to 2004 he was Assistant Professor at Sophia University, Tokyo. Since 2004 he has been at the University of Southampton, School of Management, where he is Chair in International Banking and founding director of the Centre for Banking, Finance and Sustainable...
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    James Montier, an expert in behavioral finance, argues that investors would have a greater chance of spotting the formation of bubbles if they could only brush up on their history and have a greater awareness of human psychology. Co-head of global strategy at Société Générale, Montier has been described as an “enfant terrible” by Frankfurter Allgemeine Zeitung, an “iconoclast” by the Financial Times, a “maverick” by the Sunday Times and “a...
credit creation - Related Articles
  • Value Creation—Perspectives and Implications

    Best Practice

    This article focuses on the creation of value by a company or organization. We assume a competitive environment in the sense that the end user of a product or service has the right to buy or not to buy, to use or not to use a product or service. Although the discussion and examples focus on value
    By John C. Groth

  • Understanding and Forecasting the Credit Cycle—Why the Mainstream Paradigm in Economics and Finance Collapsed


    by the current regulatory framework to create new money out of nothing—which is called “credit creation.” The collective decisions of commercial bank staff thus determine how much money is created, who gets the newly created money and to what use it is put.
    By Richard A. Werner


Definitions of ’credit creation’ and meaning of ’credit creation’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’credit creation’ and other financial terms with our online QFINANCE Financial Dictionary.

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