Finance, Credit, Investments – Economical Categories

Scientific works into the theories of finances and credit, in line with the specification of this research object, are characterized become many-sided and many-leveled.

The meaning of totality regarding the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in “the general theory of finances” there are two main definitions of funds:

1)”…Finances reflect economical relations, formation of this funds of money sources, in the act of redistribution and distribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2)”Finances represent the synthesis of central ad decentralized cash sources, affordable relations fairly with all the circulation and use, which provide for satisfaction of this state functions and responsibilities as well as provision for the conditions regarding the widened further production”. This meaning is brought without showing the surroundings of its action. We share partly explanation that is such of and think expedient to create some specification.

First, finances overcome the bounds of distribution and redistribution service associated with income that is national though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the income that is nationalof newly formed value during a year), but to your circulation of already developed value.

This latest first appears to be an integral part of value of main commercial funds, later on it really is relocated to your expense cost of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account before hand as a depression kind in the consistence of the ready products cost price.

2nd, main goal of finances is significantly wider then “fulfillment for the state functions and responsibilities and provision of conditions for the widened further production”. Finances exist on the state degree as well as in the manufactures and branches’ level too, as well as in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and use of the funds of cash sources, that comes from the following concept of the finances: “financial money relations, which types in the act of distribution and redistribution associated with the partial value associated with the nationwide wealth and total social product, is related to the topics for the economy and formation and use of the state cash incomes and cost savings in the widened further production, into the product stimulation regarding the employees for satisfaction of the society social as well as other demands”.

The funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests” in the manuals of the political economy we meet with the following definitions of finances:”Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings. “The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And also the totality of affordable relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”. As we’ve seen, definitions of finances made by financiers and economists that are political not differ significantly. Atlanta divorce attorneys discussed place you will find:

1)expression of essence and phenomenon into the definition of funds;

2)the concept of funds, as the operational system for the creation and usage of funds of money sources on the amount of trend.

3)Distribution of funds as social product therefore the value of nationwide earnings, concept of the distributions prepared character, main goals associated with economy and relations that are economical for servicing of which its used.

If refuse the preposition “socialistic” into the definition of funds, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern literature that is economical. We might give such an elucidation: “finances represent money sourced elements of manufacturing and usage, additionally money relations starred in the process of circulating values of created product that is economical national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”. in this elucidation of finances like D. S. Moliakov and V. M. Rodionov’s definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution associated with the value of developed product that is economical additionally the partial distribution regarding the value of nationwide wealth”. This latest is very real, reasonably to your procedure for privatization therefore the change to privacy and it is periodically utilized in practice in numerous nations, as an example, the uk and France.

“Finances – are money sources, money, their creation and movement, circulation and redistribution, usage, also affordable relations, which are trained by intercalculations between the economical topics, movement of cash sources, money blood circulation and usage”. “Finances would be the system of economical relations, which are connected with company creation, distribution and usage of financial resources”.

We speak to absolutely innovational definitions of funds in Z. Body and R. Merton’s foundation manuals. “Finance – it is the science how the folks lead investing `the deficit cash resources and incomes into the definite period of time. The decisions that are financial characterized by the costs and incomes that are 1) divided in time, and 2) as a rule, it is impossible to take them into account beforehand neither by people who get choices nor just about any person” . “Financial theory includes amounts of the conceptions… which learns methodically the subjects of circulation associated with the money resources fairly to the time factor; it considers models that are quantitative with the aid of which the estimation, putting into practice and realization associated with alternate variants of each monetary choices happen” .

These basic conceptions and quantitative models are employed at every degree of getting financial choices, however in the definition that is latest of funds, we meet up with the following doctrine of the monetary foundation: main purpose of the funds is within the satisfaction of the people’s requests; the topics of affordable tasks of any sort (companies, also state organs of every degree) are directed towards fulfilling this fundamental function.

For the objectives of our monograph, you should compare well-known definitions about funds, credit and investment, to decide exactly how and exactly how much it is possible to integrate the finances, opportunities and credit to the one part that is total.

Some researcher thing that credit could be the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that a cost-effective group of credit exists parallel to your economical group of funds, by which it underlines impossibility of this credit’s presence into the consistence of finances.

N. K. Kuchukova underlined the independence associated with group of credit and notes it is only its “characteristic feature the turned movement regarding the value, which can be not related with transmission for the loan possibilities alongside the owners’ legal rights”.

N. D. Barkovski replies that functioning of money produced an basis that is economical apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such relations that are economical which lean upon income and credit. Let us discuss the spread definitions that are most of credit. in the modern publications credit were “luckier”, then funds. As an example, we meet the after concept of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower”.

Here is the traditional definition of credit. In the earlier dictionary of the economy we read: “credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent”. The following definition is given: “credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation” in the manual of the political economy published under reduction of V. A. Medvedev.

Credit is talked about within the way that is following the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an character that is objective. Its used for supplying widened further production of the state and other needs. Credit differs from finances by the character that is returning while funding of manufactures and companies by hawaii is fulfilled without this disorder”.

We meet up with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a process that is historical of the affordable and money relations, the form of that is the amount of money relation”.

After researchers give slightly various definitions of credit:”Credit – is a loan in the form of commodity or money, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower”. Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the buying price of fixed percentage. Therefore, a credit may be the loan in the shape of commodity or money. A definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor in the process of this loan’s movement. Combining every meaning called above, we arrive at a concept, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite relations that are economical the participants regarding the process of money development. Necessity regarding the credit relations is conditioned, in one side, by gathering solid quantity of temporarily money that is free, and through the second part, existence of needs of those.

Though, at the time that is same must distinguish two resembling concepts: loan and credit. Loan is characterized by:

o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (debtor): a)under the owning for the debtor and, during the time that is same b) underneath the conditions of returning exact same quantity or exact same volume and quality associated with the things;

O The loaning of money might keep no interest;

oAny individual usually takes part in it.With the difference with loan, credit, which can be somehow a private occasion of the loan, represents:

oOne side (loaner) offers towards the second one (borrower) only money, and _ for temporal use;

oIt may not keep no interest (if the assignment does not foresee one thing);

oIn it creditor is not any person, but a credit organization (during the first place, banks).So, a credit could be the bank credit. To the mind, it isn’t proper to make use of “credit” and “loan” whilst the synonyms. Banking crediting could be the union of relations between bank (as a creditor) and its particular debtor. These relations touch upon:

a)Giving a certain amount of money to the debtor for definite purpose (however, we meet the so-called free credits, aims and things of crediting are not appointed within the project);

b)Its opportune returning;

c)Getting percentage rate through the debtor for using the sources under his/her disposal. The primary foundation of the credit essence and its own essential element is presence of trust involving the two sides (in Latin “credo”, from where comes the phrase “credit”, means “trust”).From the positioning of circulation of cash forms (in the abstraction, historic process of development affordable relations and budget that is social banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of usage and formation for the funds of cash means. Extremely often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even yet in this occasion, it’s the element of economic climate of this make and business.

Through the point of cash means movement, main character of credit is the procedure of development and use of the funds of cash means under the conditions of going back and, as a guideline, taking the value-percentage. If gating the credit value doesn’t occur (even in the exemplary occasions), based on the motion kind, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be modification that is financial.

From the point that is historical of, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banking institutions analogously required concentration for the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the kind of monetary investment (which later partially becomes loan investment) part of the bank capital appears to be the reservation (insurance coverage) area of the investment, which of course is economic and not loan. Therefore notwithstanding the primary distinctions between funds and credit form the point that is genetic-historical of, credit appears to be formed from finances and represent their modification.

Through the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the wealth that is national. Credit expresses distribution of this appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place. Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to your kind of motion. During the time that is same there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, that may think about finances and credit as a complete unity, plus in the bounds with this category itself, the separation for the certain essence associated with finances and credit would take place.

Funding for the cash means is common to the researched economical categories. It takes place in any system that is separate of and credit, which were touched upon during the analyses of defining finances and credit. Word combination “funding regarding the money sources (fund development)” reflects and describes precisely essence and as a type of economical category of more character that is general those of finances and credit categories. Though in the in economical texts and training, it is very uncomfortable to make use of a termini, which comprises of three terms. Additionally, “unloading” with an information hardens significantly its influxing into the blood supply even in the conditions of its strict substantiation and thoroughness.In the talking about context we start thinking about:

1)wide and narrow understanding of economical category of the finances;

2)discussing finances in slim understanding under basic meaning that is traditional

3)discussing funds, as capital of this money means, in wide understanding, which concerns funds – in slim meaning and credit – in complete meaning.Termini “funding” and its own comparable “fund development” are used we have established a new termini – “finance-investment sphere” (FIS) by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.. Analyses about interrelation of finances and credit made us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring by us give. In this process we consider during the same time financial, credit and investments’ economical categories.

Let us sum up center results of talking about concept that is new “finance-investment sphere” and discuss its investment consisting components.

The concept “investments” had been brought in to the indigenous science that is economical the West. In the soviet science that is economical for a long time used in the place “investments” the termini “capital placement”, which expressed the use of the commercial facets in the sphere of genuine commercial activities during realization of money projects. From one glance, this termini in its concept is identical to the “investments”, consequently it is possible to use them as synonyms. Though the termini “investments” and “investing” have the advantage towards the termini “capital placement” from philological and linguistic points of view, because they are expressed with one word. It is not just economical and comfortable in the process of working with the termini “investment” itself, but also it gives an opportunity of termini formation. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.Changing native economical termini with foreign ones is purposeful, if it truly matters (by keeping parallel usage of the indigenous termini for the inheritance). Though we must not change indigenous termini that is economical foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science may turn economical language into the slang that is tangled.

Let us talk about termini – “investment” and “capital positioning’s” usage into the literature that is economical are placement of funds into the main and circulation capital for the purpose of getting profit. “Investments in material assets – are the placements of funds into the mobile and real estate (land, structures, furniture and so forth). Opportunities in financial assets would be the placements of funds to the securities bank reports and other monetary instruments”.

We do not meet up with the termini “investments” in the last economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble”. For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment procedure. They themselves fulfill this or that investment procedure.

A positive side of the discussed definitions is the fact that they link investment policy and capital placements (opportunities):

-economical development according to the directions that are key the concentration;

-providing high prices of affordable growth;

-raising an effectiveness that is economical which is expressed:

a)by growing the throw from the production and national income for every lost Ruble;

b)by fulfilling the branch framework associated with opportunities;

c)by improving their technical framework;

d)by optimization of the production that is further framework.

In contrast to such definition of the investments (money placement) this is of opportunities in the dictionary connecting the “Economics” seems to be unimproved: “investments – the expenses of gathering manufacturing and industrial means and material that is increasing. In this definition current expenses (manufacturing expenses) are blended with the investment (capital) cost. Additionally, maybe not the investment costs but (though the assets are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the capital that is concept-advanced corresponding. the advancing may be recognized in the money, natural-material and forms that are informational.

Except the termini “investments”, there are two more termini related with the investment. These are typically shown below.

“Human capital investment” – any activity supplied for rising the workers labour efficiency (in the way of growing their certification and developing their abilities); during the expenses of improving the employees’ training, health insurance and raising the flexibility for the working forces”. It is extremely helpful to use the mentioned termini, though it takes one modification: the human being money assets do not concern only workers, but in addition the servants, representatives of each types of labour.”Investment commodity, capital goods – a capital.”

In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. The investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves) in this definition:

a) producing new ones;

b) widening;

c) reconstruction;

d) renewing.

Additionally, the idea of the industrial gathering appears, at the costs of widening of fundamental, blood supply funds and also insurance reserves happens”.

You will meet below the definitions of opportunities from “the span of economy”: the assets are known as “placements of fund to the basic capital (basic way of production), reserves, additionally other economical items and processes, which request long-termed influxing of product and money means. “According to the division of capital into physical and money types, the opportunities too needs to be divided into material and money investments”.

They apportion investment commodity, to which belong commercial and building that is nonindustrial, automobiles purposed for changing or widened technical park plus the furniture, increasing reserves among others.

“They call the full total assets of manufacturing an investment product, that is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the degree of before industrial use, deteriorating and repairing regarding the fundamental means. 2nd consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”. Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful source that is financial of resources.Human capital investment is “a kind that is specific of, mostly in education and wellness protection”.

“Real opportunities would be the assets into the affordable branches as well as, these are typically kinds of economical tasks, which provide influxing the increases of real capital, that is increasing product values associated with the commercial means”. We could agree with such meaning with one specification that product and nonmaterial values too participate in the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution wealth that is social one personal individual to a different (except charity).

“Financial investments represent keeping of funds into the stocks, responsibilities, promissory records, other securities and instruments. Such opportunities, needless to say, usually do not give increases of the material that is real, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing”. We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real wealth that is nonmaterial. Based on this context, the phrase below is vital: “we must distinguish financial investments, which represent keeping of the funds within the methods of attempting to sell and purchasing the securities for the true purpose of getting revenue and monetary opportunities, which become cash and real, relocated to real physical capital.”

Into the “economical course” quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. That we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don’t agree with it if we get such conditioned criteria. A character that is long-termed of fund placement is an important feature of this investments (short-term does not match the thought of investments). Principally, it will be more straightforward to explain quick compensative, middle termed compensative and long-termed compensative investments:

-less then half a year – fast compensative;

-from a few months as much as the year and a half – middle termed compensative;

-more then the and a half – long termed compensative year.

We stopped during the concept of the opportunities within the money work “economical course” for the unique purpose, as, inside it the author attempted to talk about the idea of assets systemically and quite completely, herewith the book is posted just now.

We will come back to the discussion this is economical sounding “investments” in different magazines within the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.What conclusions could be made according the meaning of the mentioned affordable category into the posted works, except the made notions and specifications?

There clearly was quite profoundly, concretely and thoroughly defined the concept of “investments”, different definitions into the affordable literature; but mostly in almost every works concerning the investments talked about by us as yet, there isn’t exposed the essence of assets as an category that is economical. In every monograph , even if it has a title investment, as an category that is economical there is offered just the meaning, notion of assets. But, while the Academician Vasil Chantladze explains, “an idea is a discussion, which proves one thing concerning the identifying function for the object that is researched. A concept out of much essential characteristic features represents only one, and essential in it is just – definition”.

However the categories are much wider; its “a key, the absolute most concept that is fundamental of science”. Economical categories theoretically represent real, objectively existed productive relations. A category could be the defining of occasions of existed characters, connections, relations regarding the world that is objective. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the understanding that is narrow.

Right here we make an application for another handbook thesis made by the academician Vasil Chantladze: “every financial relation is an economical one and every financial category is and economical one, although not every affordable connection and affordable category is financial relation and monetary category”. The sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments” in the process of defining the investments, it is important to take in mind.

As we’ve mentioned above, not long ago, in the well-known Soviet literature the concepts of “the placement of funds” and “investments” were accepted to be the synonyms and concerned to be investment of sources for further production of the main funds and formation of the turnover funds. We meet with such understanding of the concept of “investment” (here, they separate three types of the investment expenses: investments in the basic capital of investments, investments in the house building and investments in the reserves) in the modern economical publications and it is mostly used on the level that is macro a statistical analyze of affordable processes. In this occasion that is concrete is the group of book.