Basic functions of the loan. Savings in distribution costs Acceleration of capital concentration as a function of credit
Loan functions like any economic category, express its essence. They are objective and show interaction with the external sphere.
1. Redistributive function. In conditions market economy credit moves money capital from one area economic activity to others, providing the latter with higher profits. This redistributive process affects the cost not only gross product and national income, but also national wealth in certain periods.
Credit acts as a spontaneous regulator at the macroeconomic level, redistributing the value temporarily released between industries and territories.
V special cases the redistributive function can cause disproportionate market structure.
The state must regulate credit relations in order to ensure the attraction of credit resources to production.
2. The function of saving distribution costs. By mobilizing temporarily released funds in the process of the circulation of industrial and commercial capital, credit makes it possible to make up for the shortage of its own financial resources from individual enterprises. An enterprise often turns to a loan to provide itself with the required amount of working capital. As a result, the capital turnover of an economic entity is accelerated. In general, savings in overall distribution costs are provided.
3. The function of replacing cash with credit. Credit accelerates not only commodity, but also money turnover displacing cash from it. In the sphere of money circulation such credit instruments like bills, checks, credit cards... As a result of the replacement of cash cashless transactions the mechanism of economic relations in the market is simplified, money turnover.
4. Capital concentration acceleration function. The development of production is accompanied by the process of concentration of capital. Debt capital gives the entrepreneur the opportunity to expand the scale of production and get additional profit. Despite the need to pay interest on a loan, raising capital on a loan is always beneficial. Concentration of capital, even on a small scale, brings positive economic results in the Russian context as well.
5. Stimulating function. Credit stimulates the development of productive forces, accelerates the formation of sources of capital for expanding reproduction based on the achievements of scientific and technological progress. Closely related to this is the ability of credit to accelerate capital concentration. Borrowed funds, attached to their own, expand either the scale of production, or the scale of business operations, which allows you to get additional profit, that is, an additional source.
Credit at the present stage acts as a powerful means of regulating the economy. States through central banks to ensure sustainability national currency, the country's balance of payments, reducing inflation and other macroeconomic indicators are pursuing a unified state monetary policy.
Loan functions:
Distribution / redistribution
Emission
Control
Accelerating capital concentration
Savings in distribution costs
Service of goods turnover
Accelerating scientific and technological progress
The role and place of the loan in economic system are determined primarily by the functions that it performs, which are both general and selective.
The first function of credit- redistributive. In a market economy, the market credit funds acts as a pump that pumps out temporarily free money resources from some areas of economic activity and directs them to others, those that provide a higher degree of profit. However, in some cases, the practical implementation of this function can contribute to the strengthening of imbalances in the market structure.
It is for this reason that one of the most important tasks state regulation credit system - is the rational establishment of economic priorities and stimulation of the investment of credit in those areas or regions, the accelerated development of which is necessary in order to meet national interests, and not for the temporary benefit of individual economic entities.
Second function of credit- emission - the creation of credit means of circulation and replacement of cash. On the basis of a loan, money is issued as means of payment; methods of credit expansion (credit expansion) and credit restriction(narrowing of credit) is regulated by the amount of money in circulation. Promotes savings in cash flow costs; allows you to accelerate the turnover of money, to introduce progressive payment systems.
The third function of credit- control. This function of the loan is that in the process of lending, mutual control is carried out (both by the lender and the borrower) over the use and repayment of the loan. In the economic literature, the control function of credit is often viewed only as the control activity of the creditor (bank), which, in our opinion, is not entirely correct.
Control is part of the overall management of the lending process. Today, any business entity cannot afford to neglect credit control. Successful credit management requires combining the efforts of credit control with the focus of business entities on making a profit from the provision (receipt) of a loan.
There is a significant difference in the performance of the control function of the loan on the part of the lender and on the part of the borrower. The lender has the ability to exercise control over both the object of the loan (borrowed value) and the activities of the borrower. The borrower does not have the ability to control the activities of the lender, he exercises control only over the movement of the borrowed value (i.e. controls only the object of credit relations).
The fourth function of credit- acceleration of capital concentration. The process of concentration of capital is a prerequisite for the stable development of the economy; it is a priority goal of any economic entity. Real help in solving this problem, they provide credit funds that can significantly expand the scale of production and in this way provide additional profit. Even if we take into account the need to allocate some part of the profit for settlements with the lender for attracting credit funds, this option is more profitable in comparison with using exclusively our own resources.
Fifth function of credit- this is the saving of distribution costs. Its practical implementation results from the economic essence of credit, the source of which is financial resources, which are temporarily released in the course of the circulation of commercial and industrial capital. Time gaps between spending and receipt of financial resources of business entities may indicate not only an excess, but also a lack of financial resources. It is for this reason that loans to cover temporary cash gaps have become quite widespread.
Sixth function of credit- service of goods turnover. During the implementation of this function, credit actively affects the acceleration of both commodity and money circulation, displacing cash from it. Applying in the field of monetary circulation such financial instruments like checks, bills of exchange, credit cards, it replaces cash with non-cash transactions, which significantly affects the simplification and acceleration of the mechanism of economic relations in the international and domestic markets. The most active role in the process of solving this problem is played by commercial credit as an important element of modern relations of commodity exchange.
Seventh function of credit- acceleration of scientific and technological progress. Today, scientific and technological progress is a determining factor in economic development. Most clearly, the role of a loan in its forcing can be traced on the example of the implementation of the process of financing scientific and technical organizations, the main specificity of which is a greater than in other areas, the time gap between the first investment of resources and implementation. finished products and, accordingly, making a profit. It is for this reason that the normal operation of most scientific centers is unthinkable without the use of credit resources. Credit is equally necessary for the implementation of innovative processes in the form of the introduction of scientific technologies and developments into production, the costs of which are initially financed by enterprises.
The place and role of credit in the economic system of society is determined, first of all, by the functions it performs, both general and selective. It should be noted that the functions discussed below relate to the loan as a whole as an economic category and may not always coincide with the functions of specific credit institutions, whose activities are often determined by current market factors.
Rice. 6.1 - Loan functions
Redistributive function ... In a market economy, the loan capital market acts as a kind of pump that pumps out temporarily free financial resources from some areas of activity and directs them to others, providing, in particular, higher profits. Focusing on its differentiated level in various industries or regions, credit acts as a spontaneous macro-regulator of the economy, ensuring the satisfaction of the needs of dynamically developing objects of capital investment in additional financial resources. However, in some cases, the practical implementation of this function can contribute to deepening imbalances in the market structure, which was most clearly manifested in Russia at the stage of transition to a market economy, where the flow of capital from one sphere of production to the sphere of circulation became threatening, including with the help of credit institutions. ... That is why one of the most important tasks of state regulation of the credit system is the rational determination of economic priorities and the stimulation of attracting credit resources to those industries or regions, the accelerated development of which is objectively necessary from the standpoint of national interests, and not exclusively of the current benefits of individual economic entities.
The function of creating credit funds and saving distribution costs ... In the process of lending, various means of payment are created to service cash and non-cash forms of the sphere of circulation, which affects the structure money supply, payment turnover and velocity of money circulation. Real money is replaced by credit money. Various forms appear in circulation credit money... This function depends on the level of development of commodity-money relations, on the monetary system itself and those forms of money that are in circulation. Through a system of mutual offsets, debt claims and obligations, credit helps to reduce the money supply in circulation. At the same time, credit helps to replace high-grade money with credit, to increase the speed of money turnover, as a result of which the costs of circulation are reduced, and in the same place with them non-production costs. Thus, the basis is created for expanding the scale of production and increasing the mass and rate of profit.
Acceleration of concentration and centralization of capital ... The capital concentration process is necessary condition stability of economic development and a priority goal of any business entity. Real help in solving this problem is provided by borrowed funds, which make it possible to significantly expand the scale of production (or other business transaction) and thus provide an additional mass of profit. Even taking into account the necessary allocation of part of it for settlement with the lender, the attraction of credit resources is more justified than an orientation solely on own funds... It should also be noted that at the stage of economic recession (and even more so in the transition to a market economy) the high cost of these resources does not allow them to be actively used to solve the problem of accelerating the concentration of capital in most areas of economic activity. Nevertheless, the function under consideration, even in domestic conditions, provided a certain positive effect, making it possible to significantly accelerate the process of providing financial resources to areas of activity that were absent or extremely undeveloped during the period of the planned economy.
Control function ... Usually, credit institutions provide loans to organizations and enterprises with sustainable financial situation... The content of this function is reduced to control financial condition the borrower in order to prevent untimely fulfillment of the obligations assumed to repay the loan and interest on it. Throughout the entire lending process, compliance with all lending principles is monitored, which allows the lender to make decisions on granting loans, on tightening the lending regime, or on early return loans.
The functions of a loan, like any economic category, express its essence. They are objective and show interaction with the external sphere.
1. Redistributive function. In a market economy, credit moves money capital from one spheres of economic activity to others, providing the latter with higher profits. This redistributive process affects not only the value of the gross product and national income, but also the national wealth in certain periods.
The state should regulate credit relations in order to ensure the attraction of credit resources to production.
2. The function of saving distribution costs. By mobilizing temporarily released funds in the process of the circulation of industrial and commercial capital, credit makes it possible to make up for the lack of their own financial resources from individual enterprises. An enterprise often turns to a loan to provide itself with the required amount of working capital. As a result, the capital turnover of an economic entity is accelerated. In general, savings in overall distribution costs are provided.
3. The function of replacing cash with credit. Credit accelerates not only commodity, but also money circulation, displacing cash from it. As a result of replacing cash with non-cash transactions, the mechanism of economic relations in the market is simplified, and money turnover is accelerated.
4. Capital concentration acceleration function. The development of production is accompanied by the process of concentration of capital. Debt capital enables the entrepreneur to expand the scale of production and additional profits. Concentration of capital, even on a small scale, brings positive economic results in the Russian context as well.
5. Stimulating function. Credit relations, implying the return of temporarily borrowed value with an increment in the form of interest, induce the borrower to more rational use of the loan, to more rational management of the economy when receiving a loan.
V economic development countries, credit plays a significant role, which is characterized by the results that appear during its functioning for all members of society: individuals, business entities, the state. It manifests itself in the implementation of all forms of credit in different ways:
1) the redistribution of material resources in the interests of the development of production and sales of products in the provision and mobilization of funds from individuals and legal entities;
2) impact on the continuity of production processes and product sales;
3) participation in the expansion of production, when credit resources are used as a source of increasing fixed assets, capital expenditures;
4) accelerating the receipt by the consumer of goods, services, housing at the expense of borrowed funds;
5) regulation of cash and non-cash money turnover. The Bank of Russia, being a monopolist in the field of cash issue, organizes their circulation, and also manages non-cash payments made by the credit system, thus stimulating the entire production process.
Redistributive function. This function of the loan is that the lent value participates in economic activity the borrower, for whom this has undoubted advantages over other forms of resource mobilization, including its own. The movement of the loaned value makes it possible to satisfy the need for resources of some subjects of economic relations at the expense of the capital of others. The redistributive function of credit has a significant impact on structural changes in the economy. It leads to the concentration of capital in the most profitable industries and activities. Through credit, both the newly created value and the material and financial resources previously accumulated in the state can be redistributed.
Control function. This function means that the placement, use and repayment of the loan are controlled by the lender. Such control follows from the terms of the loan. Control is necessary when forming the lender's loan portfolio, when using and returning a loan, as well as when assessing the dynamics of the interest rate.
Emission function. Its content lies in the creation of credit means of circulation and replacement of cash. It manifests itself in the fact that in the process of lending, means of payment are created, that is, along with money in cash, money also enters into circulation. cashless form... The effect of this function is manifested when, on the basis of the substitution of cash, non-cash payments are made. Real money is replaced by credit money.
The function of accelerating concentration and centralization of capital. The credit mechanism promotes the process of converting the surplus product into capital and pushes the boundaries of individual accumulation. To increase the scale of production, the funds of individual subjects are often insufficient, therefore, separate parts of their surplus product are accumulated in credit institutions and, having reached a significant size, actively contribute to the process of expanded reproduction. In addition, concentrations are exposed to free cash population. The centralization of capital also plays an important role, since it contributes to the transformation of individual enterprises into enterprises of collective ownership. The globalization of the world economy leads to an increase in the role of international credit in the formation of the structure of the economy, its specialization, integration into the world system of the division of labor.
The function of saving distribution costs. It is inherent in a loan, which creates conditions for the involvement of free resources of economic entities in the circulation of money. Cost savings are expressed in the fact that in the absence of necessary funds to perform a particular operation, an economic entity turns to the market in search of resources. Credit helps to accelerate capital turnover and save social costs.