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|home Banking Books Money and credit - Ivanov V.M.|
Money and credit - Ivanov V.M.
Credit (from lat. Creditum — loan, debt) is one of the most difficult economic categories. A prerequisite for its occurrence was the property stratification of society during the decomposition of the primitive communal system. However, the emergence of conditions that gave credit the character of objective necessity is caused by the formation and development of commodity-money relations.
The general economic reason for the existence of credit is commodity production. Specifically for a loan, such a characteristic as a returnable cost movement of value is of fundamental importance.
The peculiarity of a credit transaction is that, whatever its initial conditions, the final stage is always carried out in cash. Regardless of the form of granting a loan - monetary or commodity - it has a monetary nature. At the same time, credit relations are not identical to monetary. These are specific, modified monetary relations, isolated as the exchange process develops.
Along with the objective basis, there are specific reasons for the emergence and functioning of credit relations. They are associated with the need to ensure the continuity of the reproduction process. In particular, the law that creates the possibility of credit functioning is the temporary release of funds and the emergence of a temporary need for them in the process of moving production assets of enterprises.
Fluctuations in the circulation of fixed assets due to the mismatch between the need for large one-time costs for updating fixed assets and the gradual nature of the restoration of their value in the depreciation process. As a result, enterprises may develop both a temporary surplus of funds accumulated in the funds for the development of production, and the need for additional financial resources for technical re-equipment and industrial construction in case of insufficiency of their own savings.
The need for working capital depends on many factors specific to each enterprise: the seasonality of production, the nature of the products and raw materials consumed, the size of the working period, the relationship between the production time and the circulation time of the product, the price level for it, and so on. both a temporary surplus of working capital, and the need to attract additional cash resources.
Incomes and savings of the population, state money accumulations, own funds of credit institutions may be temporarily free; at the same time, they may need additional cash resources. Finally, the balances on the accounts of budgetary organizations before their use are also temporarily free.
Individual circuits and turnover of funds of business entities are interconnected within the framework of a single reproduction process. In this regard, it becomes possible to make up for a temporary shortage of funds of some business agents at the expense of a temporary excess of funds of others, since the release of funds and the additional need for them, as a rule, do not coincide in the subjects of education, time and quantity. The process of accumulation of temporarily free cash and their redistribution is carried out using a loan. Thus, the contradiction between the temporary settling of funds and the need for their effective use is resolved.
The nature of the credit transaction, based on the temporary borrowing of another's property, necessitates the material liability of its participants for the fulfillment of their obligations. Thus, participants in a credit transaction must be legally independent entities and operate on the basis of economic or commercial calculation. Individuals can become subjects of credit relations if they are legally competent and have stable guaranteed sources of income.
A prerequisite for a loan is the coincidence of the economic interests of the lender and the borrower. The lender should be equally interested in issuing a loan, as should the borrower in obtaining it. Such a coincidence is not achieved automatically if one has free cash resources and the other needs them. Of decisive importance is the coordination of specific parameters of the loan - its collateral, loan term, interest rate, etc., as well as the availability of alternative financing options and allocation of funds.
Being one of the most developed commodity-money forms, a loan has a complex structure, the analysis of which should include a description of all its properties and reflect its integrity.