To understand what credit markets are, let's turn to the basics of economics.
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, as long as their functions remain unchanged.
Functions of money:
- medium;
- means of accumulation (that is, the preservation of we alth);
- a measure of value.
If we consider these functions in terms of credit, the most important is the second one. There is an interesting assumption related to the emergence of the concept of "credit". It is believed that everything went from medieval jewelers: people brought them jewelry, and jewelers, in turn, wrote receipts. These receipts were readily accepted in all other shops as payment for 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bankers began to notice that the amount of money that people invested in their shop in this way exceeded the amounts withdrawn. It is believed that this was the beginning of lending.
Lending principles
Credit - the provision of money (or goods) in debt with the payment of interest. Credit relations between the parties are based on the following principles:
- Obligation: the loan must be repaid.
- Urgency: This should not be done at any convenient time, but at a specific and predetermined date.
- Assurance: The borrower must provide some kind of guarantee that he is able to make payments on the loan. Currently, secured loans have been used as such a guarantee.
- Purpose: Loan must be earmarked.
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 the movement of money capital. Credit in this process acts as an elastic mechanism that controls the "flow" of capital from industry to industry and equalizes the rate of profit. Credit markets are markets in which there is a supply and demand for means of payment. Credit institutions usually mediate transactions. Banks act as lending institutions. The financial and credit market provides funds at the disposal of enterprises, thus, they move from sectors of the economy with their excess content to sectors with a shortage of funds.
Let's turn to the history of the credit market in Russia. 1994 was the most controversial year: established trends changed, new ones were outlined, but, soand not getting stronger, they changed again. But some trends that began to develop in previous years found their logical conclusion in 1994. For example, the interest rates of sectoral and universal banks have leveled off. The rates of state and commercial lending to organizations also converged. The Russian credit market experienced 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, in order to quickly overcome the crisis, the largest Russian banks created a "backbone" around which a new market began to form. Since these banks had colossal authority, they forged shattered ties. Another crisis happened 3 years later. He taught large banks a good lesson: the most stable market structure is not the one that is larger, but the one that has an adequate and competent level of management. To date, 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.
