In order to understand what credit markets are, let us turn to the basics of the economy.
Money is one of the most important inventions of mankind. In ancient times, money was replaced by various goods that were used daily in everyday life. Some economists believe that money, in fact, can be absolutely everything, if only their functions remain unchanged.
Functions of money:
- medium of circulation;
- means of accumulation (i.e. preservation of wealth);
- measure of value.
If we consider these functions from the point of view of credit, then the second is the most important. There is an interesting assumption associated with the emergence of the concept of "credit." It is believed that everything came from medieval jewelers: people brought them jewelry, and jewelers, in turn, wrote receipts. These receipts were readily accepted in all other shops for the payment of goods. It is believed that this is the earliest form of money. At first, their receipts had full liquidity, but over time, future bankers began to notice that the amount of money that people invested in such images in their shop exceeds the withdrawn amount. It is believed that this was the beginning of lending.
Lending principles
Credit - the provision of cash (or goods) in debt with interest. Credit relations between the parties are based on the following principles:
- Mandatory: the loan must be repaid.
- Urgency: this should not be done at any convenient time, but at a specific and predetermined time.
- Warranty: the borrower must provide any guarantee that he is able to make payments on the loan. Currently, secured loans have been used as such a guarantee.
- Purpose: the loan should be targeted.
Capital in the form of means of production cannot move from one industry to another. This process, as a rule, is carried out in the form of a movement of money capital. Credit in this process acts as an elastic mechanism that controls the "overflow" of capital from industry to industry and equalizes profit rates. Credit markets are markets in which there is a supply and demand for means of payment. Credit institutions, as a rule, mediate transactions. The role of credit institutions are banks. The financial and credit market places funds at the disposal of enterprises, thus moving them from sectors of the economy with excessive content to sectors with a shortage of funds.
Let us turn to the history of the credit market in Russia. 1994 was the most controversial year: established trends were changing, new ones were outlined, but, without strengthening, they were changing again. But some trends that began to develop in previous years found their logical conclusion in 1994. For example, the interest rates of industrial and universal banks have leveled off. The rates of state and commercial lending to organizations also approached. The credit market in Russia underwent its first crisis in 1995. It was only a banking crisis, so the economic and political situation in the country was still quite strong.
Then, to quickly get out of the crisis, the largest Russian banks created a “backbone” around which a new market began to form. Since these banks possessed tremendous authority, they established broken ties. Another crisis happened 3 years later. He taught large banks a good lesson: the most stable is not the market structure that is larger, but the one that has an adequate and competent level of management. Today, credit markets are the main segment of the financial market. They contain the greatest potential and monetary volumes. It is credit markets and related relationships that drive and accelerate the market economy as a whole.
