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Money and credit - Ivanov V.М.

17.2. Borders of credit at macro and micro levels

At the macroeconomic level, several types of credit boundaries are distinguished, due to the complexity of credit relations, the variety of their manifestations. The macroeconomic boundaries of the loan show the limit of the spread of relations regarding the accumulation and placement of the loan fund as a whole. Each of these boundaries has a quantitative characteristic.

The external and internal boundaries of the credit are singled out. Under the external borders of credit relations are understood their qualitative isolation in time and space from all other relations. The external borders include the whole set of credit relations, show the objective limits of their functioning, the place of credit in the economic relations of society. At the same time, through these boundaries, credit is interconnected with other economic categories, and this relationship is one of the factors that determine the boundaries in question. Thus, the parameters of the credit sphere depend on the amount of budgetary financing of the public economy, the amount of credit investments affects the aggregate money supply, and so on.

Factors affecting the external boundaries of credit are very diverse and multifaceted: the level of development of production; Volume and structure of credit resources; Degree of completeness of enterprise self-financing; The need to ensure cash circulation by means of payment; Financial condition of economic entities; Ratio of used forms of credit; Social and economic policy of the state; Structure of the credit system; Operating credit facility; Pricing system; Price level and others. All of them in varying degrees (and in each period in different ways) affect the demand for credit, as well as the possibility of its provision.

The internal borders of the loan show the permissible degree of development of individual forms of credit (banking, commercial, state, consumer, international) within the external border of credit relations, ie, the ratio of parts within a single whole. The relationship between forms of credit within the credit sphere is mobile and depends on a variety of reasons, both objective and subjective. The quantitative characteristics of the internal borders of the loan are formed under the influence of common factors that affect the development of specific forms of credit in varying degrees and which sometimes have a specific significance for them.

The external and internal boundaries of the loan are dialectically interrelated. This is manifested in the fact that, first, they change under the influence of the same factors, and secondly, the change in one of them entails a change in the others.

Based on the functions performed by the loan, its functional boundaries - redistribution and emission - are singled out.

The redistribution boundary shows objectively justified limits of redistribution of funds on the basis of credit. Its quantitative characteristics are determined by the volume of credit resources of the public economy. In practice, this means, in particular, that the active operations of banks should be linked to their deposit operations.

As a source of credit, the newly created resources, that is, the funds issued, are also used. In this case, the anticipatory properties of the loan are manifested, consisting in its ability to outstrip in time the creation of savings in commodity and monetary forms. Issue loans are issued for future costs, for products not yet produced, and directly affect the aggregate money supply. It is clear that their volume can not be arbitrary and is determined by the objectively justified emission (prepayment) border of the loan.

Anticipatory properties of a loan are realized in the process of issuing payment instruments, which in modern money systems are mostly of a credit nature. In this regard, the specific parameters of equity loans should be established based on the requirements of economic laws of monetary circulation.

The boundaries considered determine the limits of the spread of credit relations at the macroeconomic level. However, the development of market principles in the credit sphere led to a situation in which the establishment and maintenance of macroeconomic boundaries of credit is mainly provided by the regulation of credit boundaries at the level of business entities.

The content of economically sound credit lines at the micro level is disclosed in terms of the creditworthiness of the borrower and the liquidity of the bank.

Credibility in general form is an economically justified credit capacity of the economic link. It is known that credit relations are an objective necessary attribute of the reproduction process, that is, the use of borrowed funds is a normal phenomenon in the activities of economic entities and is of a permanent nature.

The ability to repay a loan is determined by a set of factors that affect the level of efficiency of financial and economic activities of the borrower.

The possibility of lending is limited not only by the requirements of a certain level of creditworthiness of the borrower, but also by the need to comply with the economically justified border of the loan. Since the main bank resources are borrowed funds and the latter's loans are objectively limited, the bank must return these funds to the customers within the agreed timeframe. Therefore, the volume and structure of bank loans are determined by its ability to ensure timely repayment of its obligations. The criteria for the liquidity of commercial banks and their quantitative characteristics are established by the central bank in the form of economic standards, since the violation of credit lines by the subjects of credit relations issuing loans adversely affects the stability of money turnover and can have serious macroeconomic consequences.