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Money and credit - Ivanov V.M.

18.3. The role of credit in ensuring scientific and technical progress, saving distribution costs, in the social sphere

An important role credit is called to play in providing NTP . Its influence on increasing the technical and technological levels of the reproduction process is carried out primarily in an indirect way: through ensuring the continuity of production, stimulating an increase in output, etc. At the same time, credit acts as a factor ensuring scientific and technical progress, since it is the most important source of capital investments. However, the effectiveness of credit leverage for the development of scientific and technical progress is determined by the current credit policy. To realize the role of credit in this area, it is necessary to carry out priority lending to high-tech industries, conversion programs; purposeful lending to technical improvement of production, introduction of new types of products, goods that are in demand by the population or of important national economic importance; the development of innovative banks specializing in lending to new technical and technological projects, etc. Under the conditions of inflation, the possibilities of a loan to stimulate scientific and technical progress are sharply reduced, since the boundaries of introducing new equipment are narrowing due to its constant significant increase in cost, and the possible terms for granting a loan are much shorter payback period.

One aspect of the impact of credit on economic processes is its role in saving distribution costs. Credit helps to reduce the cost of organizing money circulation throughout the whole society, and reduces the cost of the entire monetary circulation system. This role of credit is realized primarily in the process of fulfilling the function of replacing cash with credit operations. The development of cashless payments allows us to reduce cash circulation by replacing banknotes with credit instruments servicing cashless circulation. This significantly reduces distribution costs by reducing the costs of issuing, accounting and storing banknotes.

Cost savings are also achieved by speeding up circulation. The repeated use of free cash on the basis of credit redistribution increases the speed of money circulation, which allows satisfying the needs of the reproduction process with a relatively smaller money supply. In addition, credit accelerates individual phases of circulation and, accordingly, the reproduction process as a whole, which affects cost reduction. Finally, the use of credit reduces the costs of circulation of enterprises by reducing their reserve funds in cash. With the help of credit, the most rational structure of working capital sources is achieved, which helps to increase production efficiency.

The role of credit in the social sphere is great, the social potential of which is revealed in many aspects of its functioning. In fact, all loans have a social orientation, since on their basis the efficiency of social reproduction is increased and, accordingly, the needs of society are more fully satisfied, the living standard of the population is increased. Being one of the factors for introducing advanced engineering and technology, credit helps to reduce hard and low-skilled labor, and increases the productivity of social labor and the income of workers.

Credit helps to improve the consumer market in accordance with the priorities of social policy. In this area, the role of loans directed to the sectors of the production of consumer goods, trade, public catering, etc., for preferential lending to agriculture is significant. Consumer credit is of great social importance, contributing to a more rapid increase in the real standard of living of the population.

In the context of the development of the process of integration of the Ukrainian economy into the world economic system, the role of credit in the foreign economic turnover is growing. The loan creates favorable conditions for the development of international economic relations, allows the import of goods with a passive trade balance, helps to increase the export of goods, is an important factor in the development of the international division of labor.