The credit
THE PLAN
- INTRODUCTION
- NECESSITY OF THE CREDIT
- CREDIT FUNCTIONS
- MAIN PRINCIPLES OF THE CREDIT
- THE CONCLUSION
- THE LITERATURE LIST
I. INTRODUCTION
With development of commodity manufacture when money starts to carry out function of instruments of payment and an exchange the Goods - Money - the Goods take the form the Goods - the Obligation - Money, i.e. with time rupture between sale of the goods and reception for it of payment, there is credit money. They act as the obligation which should be extinguished through in advance target date. In this connection there are financially-credit relations which regulate a legal side of such form of payment.
The enterprises of all patterns of ownership even more often have a requirement of attraction of extra means, for realisation of the activity and profit extraction. The most widespread form of attraction of means is reception of the bank loan under the credit contract.
I. NECESSITY OF THE CREDIT
The credit [kredo] - I trust. As the loan capital is called the capital in the monetary form, given in the loan its proprietors on the terms of a reflexivity for a payment in the form of percent and promptness.
The credit is a form of movement of the loan capital, granting of money or the goods on credit, as a rule, with payment of percent; the cost economic category, the integral element of commodity-money relations. Credit occurrence is connected directly with exchange sphere where owners of the goods resist each other as the proprietors, ready to enter economic relations.
Possibility of occurrence and credit development are connected from a circle by a turn and a capital turn. In the course of core and working capital movement there is a liberation of resources. Means of labour are used in the course of manufacture long time, their cost is transferred on cost of finished goods by parts. Gradual restoration of cost of a fixed capital in the monetary form leads to that liberated money resources settle on accounts of the enterprises. At the same time on other pole there is a requirement for replacement of the worn out means of labour and enough large single expenses. Similar processes on the character occur and in working capital movement. Moreover, here fluctuations in a circle a turn and a turn prove more variously. So, owing to seasonal prevalence of manufacture, non-uniform deliveries and another there is a discrepancy of time of creation and production reference. One subjects have a temporary surplus of means, at others - their lack. It creates possibility of occurrence of credit relations, that is the credit resolves the relative contradiction between time subsidence of means and necessity of their use for an economy.
Credit relations in economy are based on the certain basis, as one of which elements the principles strictly observed at the practical organisation of any operation in the market of loan capitals act. These principles spontaneously developed at the first stage of development of the credit, and further have found direct reflexion in nation-wide and international credit legislations.
The credit represents the form of movement of the loan capital, i.e. The monetary capital given in the loan. The credit provides transformation of the monetary capital in loan and expresses relations between creditors and borrowers. With its help free monetary capitals and incomes of the enterprises, personal sector and the state accumulate, turning to the loan capital which is transferred for a payment in time using.
The capital physically, in the form of means of production, cannot be poured from one branches in others. The credit resolves the contradiction between necessity of free transition of the capital from one branches of manufacture in others and fixedness of the industrial capital in the certain natural form. He allows to overcome limitation of the individual capital also.
At the same time the credit is necessary for maintenance of a continuity of a circle of a turn of funds of the operating enterprises, service of process of realisation of the industrial goods that is especially important in the conditions of formation of market relations.
CREDIT FUNCTIONS
The place and credit role in economic system of a society are defined first of all by functions carried out by it.
REDISTRIBUTIVE FUNCTION.
The enterprises of all patterns of ownership even more often have a requirement of attraction of extra means, for realisation of the activity and profit extraction. The most widespread form of attraction of means is reception of the bank loan under the credit contract.
In the conditions of market economy the market of loan capitals represents itself as the tool pumping out temporarily free financial resources from one spheres of economic activities and directing them in other, providing higher profit. The credit acts in a role of a spontaneous macroregulator of economy, providing satisfaction of requirements of developing objects of the appendix of the capital in additional financial resources. However in some cases practical realisation of the specified function can promote deepening of disproportions in market structure that was most visually showed in Russia at a transition stage to market economy where having poured capitals from manufacture sphere in reference sphere has accepted menacing character, including by means of the credit organisations. For this reason one of the major problems of state regulation of credit system - rational definition of economic priorities and stimulation of attraction of credit resources in those branches or the regions, the accelerated which development is objectively necessary from a position of national interests, instead of exclusively current benefit of separate subjects of managing.
ECONOMY OF DISTRIBUTION COSTS.
Practical realisation of this function directly follows from economic essence of the credit as which source financial resources act, industrial and trading capitals. Time rupture between receipt and an expenditure of money resources of subjects of managing can define not only surplus, but also a lack of financial resources. For this reason so the wide circulation was received by loans for completion of a time lack of own circulating assets, used practically all categories of borrowers and providing essential acceleration of the capital, and consequently, and economy of the general distribution costs.
ACCELERATION OF CONCENTRATION OF THE CAPITAL.
Process of concentration of the capital is a necessary condition of stability of development of economy and an overall objective of any subject of managing. The real help in the decision of this problem is rendered by the extra means allowing essentially to expand scale of manufacture (or other economic operation) and, thus, to provide additional weight of profit. Even taking into account necessity of allocation of its part for calculation with the creditor, attraction of credit resources is more justified, than orientation exclusively on own means. It is necessary to notice, however, that at a stage of economic recession (and the more so in the conditions of transition to market economy) dearness of these resources does not allow to use actively them for the decision of a problem of acceleration of concentration of the capital in the majority of spheres of economic activities. Nevertheless, considered function even in domestic conditions has provided a certain positive effect, having allowed it is essential to accelerate process of maintenance by financial resources of fields of activity absent or not extremely developed in a planned economy.
GOODS TURNOVER SERVICE.
In the course of realisation of this function the credit actively influences acceleration not only commodity, but also monetary circulation, superseding from it, in particular, cash. Entering into monetary circulation sphere such tools as bills, checks, credit cards etc., it provides replacement of cash calculations with non-cash operations that simplifies and are accelerated by the mechanism of economic relations in the internal and international markets. The most active, a role in the decision of this problem play the commercial credit as a necessary element of modern relations of barter.
ACCELERATION OF SCIENTIFIC AND TECHNICAL PROGRESS.
Scientific and technical progress is the defining factor of economic development of any state and the separate subject of managing. For this reason normal functioning of the majority of centres of science (except for being on budgetary financing) is impossible without use of credit resources. And the credit is so necessary for realisation of innovative processes in the form of direct introduction in manufacture of scientific workings out and technologies, expenses on which are originally financed by the enterprises, including at the expense of target an average - and long-term loans of bank.
So, the credit are the economic relations arising between the creditor and the borrower concerning cost, betrayed in time using.
In the conditions of market economy the credit carries out following functions:
- Accumulation of temporarily free money resources;
- Redistribution of money resources on the terms of their subsequent return;
- Creation of credit tools of the reference (banknotes and treasury notes) and credit operations;
- Regulation of volume of a cumulative monetary turn.
Main principles of the credit are the reflexivity, promptness. Main principles of the credit are the reflexivity, promptness.
MAIN PRINCIPLES OF THE CREDIT
Credit relations in economy are based on the certain methodological basis, as one of which elements the principles strictly observed at the practical organisation of any operation in the market of loan capitals act. These principles spontaneously developed at the first stage of development of the credit, and further have found direct reflexion in nation-wide and international credit legislations:
CREDIT REFLEXIVITY.
This principle expresses necessity of timely return of the financial resources received from the creditor after end of their use by the borrower. It finds the practical expression in repayment of the concrete loan by transfer of the corresponding sum of money resources to the account of the credit organisation which have given it (or other creditor), that provides возобновляемость credit resources of bank as necessary condition of continuation of its authorised activity. In domestic practice of crediting in the conditions of the centralised planned economy there was an informal concept "nonrepayable subsidy". This form of crediting had enough wide circulation, especially in agrarian sector, and was expressed in granting by the state credit institutions of the loans which return initially was not planned because of a crisis financial condition of the borrower. On the economic essence nonrepayable subsidies were faster the additional form of the budgetary grants which are carried out through intermediary of the state bank, that traditionally complicated credit planning and conducted to constant falsification of an account part of the budget. In the conditions of market economy the concept of the nonrepayable subsidy is so inadmissible, as for example, concept "according to plan-unprofitable private enterprise".
PROMPTNESS OF THE CREDIT.
It reflects necessity of its return not during any time comprehensible to the borrower, and in precisely certain term fixed in the credit contract or the document replacing it. Infringement of the specified condition is for the creditor the sufficient basis for application to the borrower of economic sanctions in the form of increase in the raised percent, and at the further delay (in our country - over three months) - presentations of financial requirements in a judicial order. A partial exception of this rule are the so-called call loans which term of repayment in the credit contract initially is not defined. These loans which have been extended enough in XIX - the beginning of XX centuries (for example, in an agrarian complex of the USA), in modern conditions practically are not applied, first of all, because of complexities created by them in the course of credit planning. Besides, the contract on the call credit, not defining the fixed term of its repayment, accurately establishes time, available the borrower from the moment of reception of the notice of bank by it about return received before means, that to some extent provides observance of a considered principle.
ПЛАТНОСТЬ THE CREDIT. LOAN PERCENT.
This principle expresses necessity not only direct return by the borrower of the credit resources received from bank, but also payment of the right to their use. The economic essence of a payment for the credit is reflected in actual distribution in addition received for the account of its use of profit between the borrower and the creditor. Practical expression finds a considered principle in process of an establishment of size of the bank percent which is carrying out three basic functions:
- Redistribution of a part of profit legal and the income of physical persons;
- Regulation of manufacture and the reference by distribution of loan capitals at branch, interbranch and international levels;
- At crisis stages of development of economy - anti-inflationary protection of monetary accumulation of clients of bank.
The rate (or norm) the loan percent, defined as the relation of the sum of the revenue received on the loan capital, to the sum of the given credit, represents itself as the price of credit resources.
Expressing a credit role as one of offered on a specialised commodity market, the credit stimulates the borrower to its most productive use.
Essentially differing from the traditional mechanism of pricing on other kinds of the goods, as a defining which element socially necessary expenses of work for their manufacture act, the credit price reflects the general parity of a supply and demand in the market of loan capitals and depends on variety of factors, including purely tactical character:
- Recurrence of development of market economy (the loan percent, as a rule, increases by recession stages, at a stage of fast lifting - decreases);
- Rates of inflationary process (which in practice even lag behind rates of increase of loan percent a little);
- Efficiency of the state credit regulation which are carried out through the registration policy of the central bank in the course of crediting by it of commercial banks;
- Situations in the international credit market (for example, spent by the USA in 80th of rise in price of the credit of the politician has caused attraction of the foreign capital in the American banks, that was reflected in a condition of the corresponding national markets);
- Dynamics of monetary accumulation physical and legal bodies (at the tendency to their reduction the loan percent, as a rule, increases);
- Dynamics of manufacture and the reference, defining requirement for credit resources of corresponding categories of potential borrowers;
- Seasonal prevalence of manufacture (for example, in Russia the rate of loan percent traditionally raises in August-September, that is connected with necessity of granting of agrarian credits and credits for delivery of the goods to the Far North);
- Parities between the sizes of the credits given by the state, and its debts (the loan percent stably increases at increase in an internal public debt).
SECURITY OF THE CREDIT.
This principle expresses necessity of maintenance of protection of property interests of the creditor at possible infringement by the borrower of the obligations taken up and finds practical expression in such forms of crediting, as loans under pledge or under financial guarantees. This principle in economic instability is especially actual.
THE DIFFERENTIATED CHARACTER OF THE CREDIT.
This principle defines the differentiated approach from the credit organisation to various categories of potential borrowers. Its practical realisation can depend both on individual interests of concrete bank, and from the centralised policy of support of separate branches spent by the state or fields of activity (for example, a small-scale business and so forth)
THE CONCLUSION
The credit is capable to have active influence on volume and structure of monetary weight, a payment turn, speed of the reference of money. Causing by a life various forms of credit money, it can provide in transition of Russia to the market creation of base for the accelerated development of clearing settlements, introductions of their new ways. All it will promote economy of distribution costs and increase of efficiency of public reproduction as a whole.
Thanks to the credit there is faster process of capitalisation of profit, and, hence, concentration of manufacture. A condition of placing of actions in the market are accumulation of considerable monetary capitals and their concentration in credit system. The credit system in the name of banks accepts active participation and in the release, and placing of actions.
The credit stimulates development of productive forces, accelerates formation of sources of the capital for expansion of reproduction on the basis of achievements of scientific and technical progress.
With out credit support it is impossible to provide fast and civilised formation of farms, the small-scale business enterprises, introduction of other kinds of enterprise activity on interstate and external economic space.
The credit system, first of all, is presented by the bank, consumer, commercial, state and international credit. Specific forms of relations and crediting methods are peculiar to all these categories of credit. Realise and will organise these relations the specialised establishments forming credit system in the second understanding.
