The finance system is represented by an ordered combination of some financial relationships. The links of such a system are combined into three main blocks, each of which has its own internal structure:
- centralized finance represented by the state budget and extra-budgetary funds, state credit and various funds (personal and property insurance), as well as the stock market;
- decentralized finances owned by commercial entities, financial intermediaries and non-profit organizations;
- personal finance (households).
Thus, finance is an economic category, which is a structural element of the corresponding system, each link of which can be characterized by special methods of formation with the subsequent use of funds. Each link has a specific role in social production.
For example, centralized finance is an instrument of general regulation of the national economy. Using this tool, resources are mobilized to the budget with their subsequent distribution and redistribution between individual sectors, economic regions and specific groups of the population.
Decentralized finance is a mechanism for regulating social and economic relations between business entities. It is their condition that determines the financial condition of the state, due to the formation of most of the resources in this part of the economy.
And finally, personal finance is a monetary relationship between citizens who live together and share a common household. A household, unlike a family, includes, in addition to relatives, also people who fully or partially contribute their share to the given budget. Also, the formation of such finances can be carried out by one person who is able to provide himself financially.
Economics and finance are two categories that closely interact with each other. So, it is in finance that relations in the economic sphere are expressed that are associated with the formation of sources of financing for various sectors of the economy. We must not forget about the need to finance such areas as production, circulation and households.
Finance at enterprises is a set of certain relations of the economic sphere that arise in the actual cash flow in the process of formation with the subsequent distribution and use of funds of financial resources of business entities (we are talking about decentralized finance). This is a fairly independent financial unit, capable of servicing material production, as well as creating GDP.
Finance as an economic category is dependent on relationships in the middle of the system itself. Despite a certain distinction of individual links with the methods and forms of formation and use of monetary resources used, the financial system is characterized by unity because it is based on a single resource source of all its links.
