According to the research object’s specification, scientific works in the theories of finances and credit are characterized as many-sided and many-leveled.
The definition of totality of the economic relations formed in the formation, distribution, and usage of finances, as money sources are widely spread. For example, in “The General Theory of Finances,” there are two definitions of finances:
1) “…Finances reflect economic relations, the formation of the funds of money sources, in the distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relative to the conditions of Capitalism when cash-commodity relations gain universal character;
2) “Finances represent the formation of centralized and decentralized money sources, economic relations relatively with the distribution and usage, which serve to fulfill the state functions and obligations and also a provision of the conditions of the widened further production.” This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.
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First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. The formation and usage of the depreciation fund, which is part of the financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year) but the already developed value distribution.
V. M. Rodionova has a different position about this subject: “Real formation of the financial resources begins on the distribution stage when the value is realized, and concrete economical forms of the realized value are separated from the consistence of the profit.” V. M. Rodionova accentuates finances as distributing relations, while D. S. Moliakov underlines the industrial foundation of finances.
In the manuals of the political economy, we meet with the following definitions of finances:
“Finances of the socialistic state represent economic (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings, the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, raising the material and cultural level of the people and for satisfying other general society requests.”
“The creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent the socialistic society’s finances. And the totality of economic 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 political economists do not differ greatly.
In every discussed position, there are:
1) expression of essence and phenomenon in the definition of finances;
2) the definition of finances as the system of creating and using cash sources funds on the level of phenomenon.
3) Distribution of finances as a social product and the value of national income, the definition of the distribution planned character, main goals of the economy, and economic relations, for servicing of which it is used.
“Finances – are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by entering calculations between the economical subjects, movement of cash sources, money circulation and usage.”
“Finances are the system of economic relations, which are connected with firm creation, distribution, and usage of financial resources.”
These basic conceptions and quantitative models are used at every level of making financial decisions. Still, in the latest definition of finances, we meet with the following doctrine of the financial foundation: the main function of the finances is in the satisfaction of the people’s requests; the subjects of economic activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.
For our monograph’s goals, it is important to compare well-known definitions of finances, credit, and investment to decide how and how much to integrate the finances, assets, and credit into one total part.
N. D. Barkovski replies that money’s functioning created an economic basis for apportioning finances and credit as an independent category and gave rise to recognition and financial relations. He noticed the Gnoseological roots of science in money and credit. The science of finances has business with researching such economic relations, which lean upon cash flow and credit.
Let’s discuss the most widespread definitions of credit. In modern publications, credit appeared to be “luckier” than finances. For example, we meet the following description 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”.
In the manual of the political economy published under the reduction of V. A. Medvedev, the following definition is given: “Credit, as an economical category, expresses the created relations between the society, labor 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.”
Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “Credit is the system of money relations 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 objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while the state’s financing of manufactures and organizations is fulfilled without this condition”.
We meet the following definition of “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. Credit creation is conditioned by a historical process of fulfilling the economic and money relations, the form of which is the money relation”.
Credit gives the temporally free money sources or commodities as a debt for the defined terms by a fixed percentage. Thus, distinction is a loan in the form of money or a thing. In this loan’s movement, definite relations are formed between a creditor (the loan is given by a juridical physical person, who gives certain cash as a debt) and the debtor.
Combining every definition named above, we come to the idea that credit is giving money capital of commodity as a debt for certain terms and material provisions under the price of the firm percentage rate. It expresses definite economic relations between the participants in the capital formation process. The necessity of credit relations is conditioned, from one side, by gathering a solid quantity of temporarily free money sources. From the second side, the existence of requests of them.
