The modern credit system is a combination of various financial institutions operating in the loan capital market and carrying out the accumulation and mobilization of money capital. The essence and functions of credit are realized through the credit system.
Concentration processes in the banking sector, which largely determine the development credit system have a number of important features in the postwar period. Significant changes are also taking place in the operations of banks and, in particular, in the forms of their relations with industry. A combination of universalization tendencies is characteristic, i.e. extensions and combinations of functions, and specializations, i.e. allocation of special types of financial institutions with their specific functions.
The monopoly stage of capitalism led to the emergence of new credit and financial institutions, which began to develop rapidly after the crisis of 1929-1933. There was a more complete delimitation of functions between various financial institutions within the credit system. Insurance companies (mainly life insurance companies), pension funds, investment companies, savings and loan associations, and other specialized institutions have rapidly grown and occupied the most important positions in the loan capital market. They have become the main source of long-term capital in the money market, displacing commercial banks in this area.
However, the decline in the share of commercial banks does not mean a decrease in their role in the economy. They continue to perform the most important functions of the credit system: settlement operations, deposit check issue, short-term and medium-term financing, as well as a certain part of long-term financing.
Credit and financial institutions carry out their functions in the economy in three main areas:
1) provision of loan capital to industry and the state;
2) accumulation of free money capital and monetary savings of the population;
3) possession of fictitious capital.
A wide network of specialized credit and financial institutions made it possible to collect free cash capital and savings and put them at the disposal of commercial and industrial corporations and the state. Thus, the development of the credit system was one of the most important prerequisites for ensuring a relatively high rate of capital accumulation, which contributed to the growth of production and the implementation of the scientific and technological revolution.
The development of a multi-tiered credit system in the capitalist countries raises competition to a new level, changing its forms and methods. The competition of banks and other financial institutions should be considered in close connection of these institutions with groupings of financial and non-financial corporations. The struggle between credit and financial institutions is in many cases a struggle between various financial and industrial groups. However, within their framework, there is a contradiction between banking monopolies and industrial corporations.
Credit and financial institutions, especially large commercial banks and insurance companies (as monopolists of loan capital), have a wide basis for collusion among themselves. This policy is carried out to the detriment of small and medium-sized firms, as well as for the general population using mortgage and consumer loans.
Large credit and financial institutions actually carry out credit discrimination in relation to part of their clientele. New credit institutions grow and develop much later than the banking system. Structural changes in the credit system exacerbate competition not only between "new" and "old" credit institutions, but also in the field of activity of the specialized non-bank credit institutions themselves.
Some credit institutions invade the traditional areas of activity of other institutions, and vice versa. Between all financial institutions there is competition for the areas of attracting savings and investment of capital, as well as a kind of specialization between certain groups of financial institutions. Thus, commercial banks in the field of attracting savings are intensified struggle with savings banks, which is expressed in the desire to prevent them from expanding their branch network. Pension funds and life insurance companies face intense competition to attract retirement savings. Pension funds, being independent institutions, but managed by banks by proxy, in recent years have pressed life insurance companies in the field of attracting household savings.
Commercial banks, insurance companies compete with each other in the long-term capital market. Commercial banks began to provide loans for up to 8-10, and sometimes up to 12 years more often, thus going beyond the usual medium-term lending. However, the development and deepening of inflationary trends in the US economy since the early 1970s. prompted insurance companies to reduce credit terms, first to 18-20, and then to 10-15 years. This, on the one hand, led to the convergence of the loan capital markets and, consequently, to the intensification of competition between them, and, on the other hand, strengthened the tendencies towards cooperation.
Banks are increasingly attracting insurance companies to participate in loans to corporations. As a result, the loan is divided between banks (the first five years) and insurance companies (the subsequent period) in time. Insurance companies attract commercial banks to participate in industrial loans when the total loan amount exceeds the capacity of a given insurance company or group of companies.
In contrast to European practice, neither commercial banks nor US insurance companies form syndicates to provide large loans, fearing that they may be subject to antitrust laws. Large loans in the US are placed in the form of individual holdings of banks, insurance companies and other financial institutions without the formal creation of a syndicate or any other association.
US insurance companies prefer to enter into direct relationships with their potential borrowers. Therefore, they are characterized by the so-called direct, or private, placement of loans and investments. In this area, the largest life insurance companies in the US have the greatest influence, concentrating in their hands the vast majority of insurance assets. In the early 1990s The ten largest companies owned 40% of all assets in American life insurance.
The development of competition between various credit and financial institutions is to a certain extent cyclical: if during a period of depression the competition for the application of loan capital intensifies between them, then during a period of recovery and recovery, competition for attracting savings from enterprises and the population in the form of deposits, insurance and pension funds increases. contributions.
Both price and non-price competition is fully developed between credit institutions. For commercial banks, the opportunities for price competition in attracting deposits are largely limited (setting interest rates on time and savings deposits is regulated by law, and payment of interest on current accounts is prohibited), so non-price competition prevails among commercial banks. At the same time, savings banks have a great advantage over commercial banks because interest rates are not controlled by law. This allows you to pay a high interest on deposits, which gives significant advantages to savings banks in attracting savings from the population.
Insurance companies and pension funds also widely use methods of non-price competition (for example, favorable contract terms, new types of insurance and collateral, flexible policy terms that can meet certain customer needs). With regard to loans and granting credits, competition between financial institutions is of a specific nature. In any group of credit and financial institutions, the interest rate on loans is set by the so-called “leadership in prices”, i.e. determined by a small group of banking monopolies.
Large credit and financial institutions use small and medium-sized firms to compete. If earlier large banks and insurance companies almost did not finance small firms, considering it an undignified business that undermines their reputation, then by the end of the 1960s. credit and financial institutions revised their policies and began to expand lending and credit operations for small firms. Thanks to this policy, the largest monopoly in the field of life insurance, Prudancial, dramatically increased its small business financing operations and in 1967 surpassed Metropoliten in terms of its assets, which was considered for many decades the leader of the insurance business. Similar methods were used by Bank of America, which allowed him to become the leader of US commercial banks in the 1960s.
In some cases, large financial institutions temporarily take losses in order to increase their competitiveness. Powerful credit and financial institutions widely use the achievements of the scientific and technological revolution in their competitive struggle, in particular electronic computers, which allow them to significantly reduce production costs and reduce the cost of mass transactions (for commercial banks - check circulation, for insurance companies - account processing, actuarial and tariff calculations).
International financial institutions divided into private and public institutions.
- 1. International private financial institutions consist of banks and non-banking institutions.
- a) banks. Significant investment potential is concentrated in the institutions of the banking system, which, unlike many other intermediary institutions, have exceptional opportunities for the use of transaction funds and credit emission. By accumulating temporarily released financial resources, banks direct them through the channels of the credit system primarily to the key, most dynamically developing sectors and industries, thereby contributing to the restructuring of the economy. The banking system is an important source of meeting investment demand. Despite relatively high level self-financing in countries with developed market economies, domestic financial resources do not cover the total need for investment. This gap becomes especially obvious when major structural changes are made in the economic organism of countries, when the demand for investment rises sharply.
The basic basis of the banking system is universal commercial banks, which are multifunctional institutions operating in various sectors of the financial market. At the same time, the development of a trend towards the specialization of banking services led to the separation of specialized investment banks. A feature of the activities of investment banks is their focus on mobilizing long-term capital and providing it through the issuance and placement of shares, bonds, other securities, long-term lending, as well as servicing and participating in the issuing and founding activities of non-financial companies.
In the modern credit system, there are two types of investment banks. Banks of the first type provide services related exclusively to trading and placement of securities, banks of the second type - with the provision of medium-term and long-term loans.
Investment banks of the first type have become widespread in England, Australia, Canada, and the USA. Investment banks of this type, as a rule, it is forbidden to accept deposits from the population and firms, their resources are formed through their own issuing activity (issuing securities) and attracting loans from other financial and credit institutions. Investment banks act as organizers of the primary and secondary circulation of third-party securities, guarantors of the issue, intermediaries and creditors in the implementation of stock transactions, active participants in the mergers and acquisitions market, agents acquiring a part of securities not placed by the company, as well as financial advisers on securities and other aspects of the activities of firms and corporations.
Investment banks of the first type operate mainly in the primary over-the-counter securities market, carrying out intermediary activities for the placement of securities. The main methods of securities placement are underwriting (purchase of the entire issue of securities with subsequent organization of its placement on the market), direct placement (in which banks act only as advisers to sellers and buyers of securities), public placement (when investment banks form a group for placement securities on the market), competitive bidding (where investment banks are the organizers of the auction). When implementing large issues of securities, investment banks create syndicates and consortiums. At present, investment banks of the first type are powerful and dynamically developing financial and credit institutions.
Investment banks of the second type have been developed in a number of Western European countries (Italy, Spain, the Netherlands, Norway, Portugal, France, Sweden) and developing countries. The main tasks of these banks are medium- and long-term lending to various sectors and sectors of the economy, the implementation of special targeted projects in the field of advanced technologies, as well as government programs for economic stabilization and socio-economic development. They are engaged in various operations in the loan capital market, accumulating savings of individuals and legal entities, providing medium-term and long-term loans to firms, investing in public and private securities, and other financial services.
It should be noted that in a number of countries investment banks perform functions that are typical for investment banks of both types. In England, Canada, and the USA, investment banks of the second type do not exist; long-term lending is carried out by other types of financial and credit institutions. In some countries (Germany, Finland, Switzerland), the functions of investment banks are performed by commercial banks.
Mortgage banks are a specific investment institution. They carry out credit operations to attract and place funds on a long-term basis secured by real estate - land and buildings. Along with the main activity, mortgage banks can engage in investing in securities, issuing loans secured by securities, and other financial services. The resources of mortgage banks are largely formed from funds raised from the issuance of mortgage bonds and mortgage bonds. These debt obligations are reliable hard interest-bearing securities, they are secured by a set of mortgage loans issued by the bank.
b) Non-bank financial and credit institutions. Non-banking financial and credit institutions include pawnshops, credit partnerships, credit unions, mutual credit societies, insurance companies, pension funds, financial companies, etc.
Pawnshops are credit institutions that issue loans secured by movable property. Historically, they originated as private usurious credit enterprises. In modern conditions, in many countries, the state participates in the formation of capital and the functioning of pawnshops. Depending on the degree of participation of the state and private capital in their activities, pawnshops are divided into state and municipal, private and mixed types. Pawnshops specialize in providing consumer loans secured by movable property. Operations are also practiced to store clients' valuables, as well as the sale of pledged property on a commission basis. This range of operations determines the specifics of the organizational structure of pawnshops: in addition to branches and offices, large pawnshops may have a network of warehouses and shops.
The peculiarities of credit operations in pawnshops include the absence of a loan agreement with a client and a pledge obligation. When issuing a loan secured by collateral, the client receives a security ticket, as a rule, to the bearer, which has a registration number in the registration log, which indicates the details of the borrower and the main terms of the transaction. Most credit transactions provide for a grace period, only after which the pledged property can be sold.
Credit partnerships are created for the purpose of credit and settlement services for their members: cooperatives, rental enterprises, small and medium-sized businesses, and individuals. The capital of credit partnerships is formed by purchasing shares and paying a mandatory entry fee, which is non-refundable upon retirement. The main operations of credit partnerships include the provision of loans, commissions and intermediary operations.
Credit unions are credit cooperatives organized by groups of individuals or small credit institutions. They are of two main types. Credit unions of the first type are organized by a group of individuals united on a professional or territorial basis. Credit unions of the second type are created in the form of voluntary associations of a number of independent credit partnerships. The capital of credit unions is formed by paying shares, periodic contributions of members of credit unions, as well as issuing loans. Credit unions carry out such operations as attracting deposits, providing loans secured by members of the union, accounting for bills of exchange, trade and intermediary and commission operations, consulting and auditing services,
Mutual credit societies are a type of credit organizations that are close in nature to commercial banks serving small and medium-sized businesses. Members of mutual credit societies can be individuals and legal entities that form the capital of the society at the expense of entrance fees. When accepting a mutual loan company, the selection committee evaluates the creditworthiness of the applicant, the guarantees or sureties provided by him, property security and determines the maximum allowable amount of the loan opened to him.
Upon joining, a member of a mutual credit society contributes a certain percentage of the loan opened to him as payment for a share contribution, undertakes to be liable for his debts, as well as for the operations of the society in the amount of the loan opened to him. When leaving a mutual credit company, its participant repays the amount of the principal debt, the part of the company's debts attributable to him, after which the entrance fee and pledged property are returned to him.
Insurance companies, implementing insurance policies, accept savings from the population in the form of regular contributions, which are then placed in government and corporate securities, mortgages for residential buildings.
A regular influx of premiums, interest income on bonds and dividends on shares held by insurance companies ensures the accumulation of stable and large financial reserves.
Insurance companies can be organized in the form of a joint-stock company or a mutual company. In the latter case, the policyholders are co-owners of the firm; the policyholder's accumulated premiums are treated as his share in the mutual company.
Private pension funds are legally independent firms managed by insurance companies or trust departments of commercial banks. Their resources are formed on the basis of regular contributions from employees and deductions from firms that have formed a pension fund, as well as income from securities owned by the fund. Pension funds invest in the most profitable types of private securities, government bonds, real estate. They are the largest institutional owner of shares, the concentration of shareholder control in them usually exceeds the degree of concentration of shares of the same firm in investment and insurance companies. The share of investments in highly liquid assets (current deposits, treasury bills, etc.) is relatively small. Pension funds are distinguished by a stable financial position and a well-thought-out investment strategy.
Financial companies specialize in lending for sales of consumer goods in installments and issuing consumer loans. Financial companies' sources of resources are their own short-term liabilities placed on the market and bank loans.
Specialized financial institutions, or parabanking institutions, are distinguished by their orientation either towards servicing certain types of clientele, or towards the implementation of mainly one or two types of services.
Their activities are concentrated for the most part on serving a small segment of the market and, as a rule, providing specialized types of credit and settlement and financial services.
Three main reasons contribute to the growth of the influence of specialized financial institutions abroad:
growth of incomes of the population in developed countries;
active development of the securities market;
3) the provision by these institutions of special services that commercial and specialized banks cannot provide.
The main forms of activity of these institutions in the banking market are reduced to the accumulation of savings of the population, the provision of loans to legal entities, municipalities and the state through bonded loans, the mobilization of capital through all types of shares, as well as the provision of mortgage, consumer loans and credit mutual assistance.
Non-bank credit and financial institutions are in sharp competition both among themselves and with commercial banks.
Insurance companies compete with pension funds to raise pension funds. Savings and loan associations are fighting insurance companies in the realm of mortgages and real estate investments. Financial companies compete with insurance companies in the field of consumer credit. In addition, all credit and financial institutions compete with commercial and savings banks to attract savings from all segments of the population.
Now let's give brief description the main specialized financial and credit institutions.
Insurance companies.
The insurance market is a special sphere of monetary relations, where the object of purchase and sale is a "specific product" - an insurance service, offers and demand for it are formed. A feature of the accumulation of capital of insurance companies is the receipt of insurance premiums from legal entities and individuals, the amount of which is calculated on the basis of insurance rates, or rates.
Pension funds are a fairly new phenomenon in the credit and banking market, which developed after the Second World War. The organizational structure of the pension fund differs from the structure of other financial institutions in that it does not provide for any form of ownership, but is created under the corporations that are their owners.
Investment companies - new form specialized non-banking institutions, which received the greatest development in the 70-80s in the United States. Investment companies raise funds by issuing their own shares, which they then invest in government and corporate securities.
Savings and loan associations are credit partnerships created to finance housing construction. Most of the associations were organized after the Second World War to promote the expansion of housing construction.
Financial companies are a special type of specialized non-banking institutions operating in the consumer market.
Credit unions are cooperative savings institutions, usually organized by trade unions, employers or a group of individuals united by certain material interests.
Various charitable foundations are also referred to specialized financial and credit institutions. Undoubtedly, the priority in the creation of charitable foundations belongs to the United States, however, in last years similar funds began to be created in Western Europe and Japan.
As for the Russian credit and banking system, here specialized non-banking institutions occupy an insignificant place. This is due to the fact that:
only non-state insurance companies and non-state pension funds have received real development in the Russian economy;
however, they account for an insignificant share in the total value of the assets of all financial institutions in Russia.
Control questions:
what kind economic processes contributed to the emergence of banks?
Formulate the concept of a bank as a credit institution, what are its main features?
name the historical prerequisites for the emergence of banking systems;
what was the need to transform the planned-directive banking system?
the structure of the modern banking system of Russia;
name the basic principles of the formation and functioning of the banking system;
why central banks are the main link of the banking system?
What is the special place and role of the Central Bank in the banking system of the Russian Federation?
list the main functions of a commercial bank in Russian economic conditions;
What is the difference between specialized financial and credit institutions in Russia?
More on the topic Specialized financial and credit institutions:
- 10.7. Specialized financial and credit organizations
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FINANCIAL AND CREDIT INSTITUTIONS
public and private, commercial organizations authorized to carry out financial operations for lending, depositing deposits, maintaining current accounts, buying and selling currency and securities, providing financial services, etc. The main financial and credit institutions are banks, but they also include financial companies, investment funds, savings banks, pension funds, mutual funds, insurance companies.
Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B.. Modern economic dictionary. - 2nd ed., corrected. Moscow: INFRA-M. 479 p.. 1999 .
Economic dictionary. 2000 .
See what "FINANCIAL AND CREDIT INSTITUTIONS" is in other dictionaries:
Public and private, commercial organizations authorized to carry out financial transactions for lending, depositing deposits, maintaining current accounts, buying and selling currency and securities, providing financial services, etc. ... ... Dictionary of economic terms
- (see FINANCIAL CREDIT INSTITUTIONS) ... Encyclopedic Dictionary of Economics and Law
SPECIALIZED CREDIT ORGANIZATIONS- financial and credit institutions arose in the 19th century. For a long time they played a subordinate role in the monetary sphere, yielding to commercial banks, but their role increased sharply in countries with market economies after the Second World War of 1939 ... ... Foreign economic explanatory dictionary
See FINANCIAL CREDIT INSTITUTIONS. Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B. Modern economic dictionary. 2nd ed., rev. M .: INFRA M. 479 s .. 1999 ... Economic dictionary
Credit and financial institutions that are not formally banks, but perform some banking operations. Non-banking institutions are investment, financial and insurance companies, pension funds, pawnshops, etc. In English: Non ... ... Financial vocabulary
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money supply- (Money supply) Money supply is cash in circulation and non-cash funds in bank accounts The concept of money supply: money supply aggregates M0, M1, M2, M3, M4, its liquidity, cash and non-cash ... ... Encyclopedia of the investor
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Books
- , O. A. Shkolik. Series `Universities of Russia` will allow higher educational institutions our country to use in educational process textbooks and teaching aids in various disciplines, prepared by…
- , Cossack A.Yu.. V study guide in the context of the functioning of financial and credit institutions, the credit market, the securities market, the insurance market and the collective investment market are considered. Special…
Specialized credit and financial institutions- these are financial organizations that are not banks, which base their activities on attracting customer funds and placing them on the terms of repayment, urgency, and payment. Such institutions are pension funds, insurance, trust, leasing, investment companies, investment funds, pawnshops. If non-banking credit institutions carry out their activities mainly for a fee (provide services for a fee), then specialized financial institutions earn on the difference between the cost of placement and the cost of raising funds.
pension funds raise funds through contributions from employers and citizens. Largest part their liabilities is long-term. Therefore, they have the opportunity to invest the funds raised in long-term securities. Legislation establishes requirements for the diversification of their investments (assets), as well as the inadmissibility of high risk.
Insurance companies attract savings of households and firms under insurance contracts. The money accumulated in this way they also invest in securities. Statistical research helps insurance companies to accurately determine the amount they will need in the future to pay for insured events. Accordingly, they have the opportunity to plan short-term and long-term investments.
Investment funds- These are companies that issue their own shares and place them publicly, attracting funds from individual investors. The funds raised are invested in securities (stocks and bonds) of other companies. Investment funds are required to diversify their investments and avoid increased risks. Investments are made mainly in stocks, and not in bonds of other companies.
Investment companies differ from investment funds in that they place their shares, as a rule, among legal entities. Investment companies often take the form of a holding when they specialize in the management of controlling interests.
Questions for self-control:
- Define the credit system. What are the main elements of the Russian credit system?
- Can the issuing bank not be a central bank? What then is their difference? Is it possible to have multiple issuing banks?
- Can a central bank be owned by private entities?
- What are the types of relationships between commercial banks? What is the role of correspondent accounts in the organization of correspondent relations between banks?
- What is the main source of raising funds for a commercial bank?
- Do banks use central bank loans as a source of funds for active operations?
- What are the main directions of placement of funds of commercial banks. What is the source of profit in these operations?
- What is the difference between universal and specialized banks? Can a bank specializing in working with exporters (on lending to industrial construction) work with individuals?
- Which credit institutions are classified as non-banking in accordance with regulations CBR?
- Are specialized financial institutions competing with commercial banks or do they operate in different markets?
1) On banks and banking activities. Federal Law of 2 Dec. 1990 No. 395-1 (as amended on 03/21/2002). // Bulletin of the Bank of Russia. 2001. October 3. No. 61. S.22-42.
2) Bank portfolio - 1. / Resp. ed. Korobov Yu.I., Rubin Yu.B., Soldatkin V.I.M.: "SOMINTEK", 1994. S. 149-214.
3) Banking: Textbook. - 2nd ed. revised and additional / Ed. O.I. Lavrushin. - M.: Finance and statistics, 2002. S. 69-75; 76-92; 94-101; 213-221; 269-304; 478-796.
4) Banking: Textbook / Ed. G. G. Korobova. - M .: Jurist, 2002. S. 195-197; 209-221; 274-276; 335-350; 359-367; 397-400; 404-424.
5) Bibikova E.A., Kotina O.V. Savings system: an approach to determining the composition and content of the main elements // Money and credit. 2003. No. 6. pp. 48-54.
6) Bukato V.I., Golovin Yu.V., Lvov Yu.I. Banks and banking operations in Russia. - 2nd ed. rework and additional / Ed. M.Kh. Lapidus. - M.: Finance and statistics, 2001. S. 208-211; 214-217; 218-220; 227-236; 243-250; 251-256; 265-282; 283-300; 305-317.
7) Money. Credit. Banks: Textbook for universities / Ed. E.F. Zhukov. - 2nd ed., revised. and additional - M.: UNITI-DANA, 2003. S. 224-254; 543-570.
8) Miller R. L., Van Hoose D. D. Modern money and banking: A textbook for universities. / Per. from English. M.: INFRA-M, 2000. S. 118-126; 135-138.
9) General theory money and credit: Textbook. / Ed. E. F. Zhukova. 3rd ed., revised. and additional M.: UNITI-DANA, 2001. S. 298-316.
10) Current state financial institutions of Russia // Society and Economics. 2003. No. 3. pp. 3-79.
11) Usov V.V. Money. Money turnover. Inflation: Proc. allowance for universities. - M .: Banks and exchanges, UNITI, 1999. S. 447-454.
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4.4. central bank Russian Federation(Bank of Russia).
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