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Money and credit - Ivanov V.M.


22.1. Credit system concept

The modern credit system is a combination of various financial institutions operating in the market of loan capital and accumulating and mobilizing money capital.

The modern credit system includes two basic concepts:

• a combination of credit and settlement and payment relations, which are based on specific, specific forms and methods of lending;

• A set of functioning credit and financial institutions (banks, insurance companies, etc.).

The first concept, as a rule, is associated with the movement of loan capital in the form of various forms of credit. The second means that the credit system through its many institutions accumulates free cash and sends it to enterprises, the public, and the government.

The credit system operates through a credit mechanism, which is the following:

• a system of relations for the accumulation and mobilization of money capital between credit institutions and various sectors of the economy;

• relations associated with the redistribution of money capital between credit institutions themselves within the framework of the current capital market;

• Relations between credit institutions and foreign clients.

The credit mechanism also includes all aspects of the loan, investment, accumulation, founding, intermediary, redistributive activities of the credit system represented by its institutions.

Through the credit system, the essence and functions of the loan are implemented.

A loan is a movement of loan capital, that is, money capital, which is given on a loan under conditions of repayment for a certain percentage. The loan performs the following functions:

• accumulation and mobilization of money capital;

• redistribution of money capital;

• replacement of cash by credit operations;

• cost savings;

• accelerating the concentration and centralization of capital;

• regulation of the economy.

On the credit market of Ukraine, two main forms of credit are realized: commercial and bank.

A commercial loan is provided by one functioning enterprise to another in the form of a deferred sale of goods.

Bank credit is provided by banks and other financial institutions to legal entities, the public, the state, foreign customers in the form of cash loans.

Currently, in countries with developed market economies, there are such forms of bank credit:

• consumer credit is provided by trading companies, banks and specialized credit and financial institutions for the purchase of goods and services by installments of payment by the population;

• a mortgage loan is secured by land for the purchase or construction of housing;

• international credit reflects the movement of loan capital in the field of international economic and monetary relations;

• a leasing loan is a relationship between legally independent entities regarding the lease of means of labor, as well as financing, the acquisition of movable and immovable property for a specified period;

state loan - a set of credit relations in which the borrower is the state, and creditors are legal entities and individuals.