Management Quality Improvement Strategy financial activities of the enterprise should provide for the effective implementation contemporary scientific achievements in this field of activity, first of all, to ensure the selection of appropriate financial instruments operations on financial market. Financial tools represent a variety of circulating financial Documents having a monetary value, with the help of which transactions are carried out on financial market.
In accordance with accounting principles, the composition modern financial instruments used by the enterprise, is characterized by the following types of them (Fig. 17.1):
1. Financial assets are the property values of the enterprise in the form of cash; and their equivalents; contracts granting the right to receive funds or other property values from another business entity; contracts granting the right to exchange financial instruments with another member financial market on potentially favorable terms; tools equity capital of another company.
2. Financial liabilities represent the obligation of an enterprise, proceeding from the terms of the contract, to transfer its funds or other property values to another economic entity; exchange financial instruments with another member
financial market on potentially unfavorable terms.
3. Equity instruments are a contractual document confirming the right of its owner to a certain part in the assets of the enterprise, remaining after deducting the amounts of all its liabilities.
4. Derivatives financial instruments(derivatives) are a special form of contract that does not require the initial investment of the enterprise, settlements for which will be made in the future period at the end of its validity period, the value of which changes due to changes in the interest rate, securities rate, exchange rate, price index, credit rating or other price characteristics of the relevant underlying financial instrument. Applicants to financial market tools, servicing operations in its various types and segments are characterized by contemporary stage with great variety.
1. By type financial markets are distinguished by the following tools:
a) Credit market instruments. These include money and settlement documents circulating in the money market.
b) Stock market instruments. These include a variety of securities circulating on this market (the composition of securities by their types, features of issue and circulation is approved by the relevant regulatory legal acts).
c) Currency market instruments. These include foreign currency, settlement currency documents, as well as certain types of securities serving this market.
d) Instruments of the insurance market. These include those offered for sale
insurance services (insurance products), as well as settlement documents and certain types of securities serving this market.
e) Gold market instruments (silver, platinum). These include the indicated types of valuable metals purchased for the purpose of forming financial reserves and hoarding, as well as settlement documents and securities serving this market.
2. According to the circulation period, the following types are distinguished financial instruments:
a) Short term financial instruments(with a circulation period of up to one year). This kind financial instruments is the most numerous and is designed to serve operations in the money market.
b) Long-term financial instruments(with a circulation period of more than one year). To this kind financial instruments include the so-called "indefinite financial instruments", the maturity date of which is not set (for example, shares). Financial tools of this type serve transactions in the capital market.
3. By the nature of the issuer's obligations financial instruments are divided into the following types:
a) Instruments to follow financial obligations for which there are no tools without further financial obligations). They are, as a rule, the subject of the implementation of the financial transactions and when they are transferred to the buyer do not incur additional financial obligations on the part of the seller (for example, currency values, gold, etc.).
b) Debt financial instruments. These tools characterize the credit relationship between their buyer and seller and oblige the debtor to repay their nominal value within the stipulated time and pay additional remuneration in the form of interest (if it is not included in the redeemable nominal value of the debt financial instrument). An example of debt financial instruments bonds, bills of exchange, checks, etc.
c) Equity financial instruments. Such financial instruments confirm the right of their owner to a share in the authorized capital of their issuer and to receive the corresponding income (in the form of a dividend, interest, etc.).
Equity financial instruments are, as a rule, securities of the corresponding types (shares, investment certificates, etc.).
4. By priority, the following types are distinguished financial instruments:
a) Basic financial instruments (financial instruments first order). Such financial instruments(as a rule, securities) are characterized by their release into circulation by the primary issuer and confirm direct property rights or credit relations (shares, bonds, checks, bills, etc.).
b) Derivatives financial instruments or derivatives ( financial instruments of the second order) characterize exclusively securities confirming the right or obligation of their owner to buy or sell circulating primary (basic) securities, currency, goods or intangible assets on predetermined conditions in the future period. Such financial instruments used for speculative financial price risk insurance operations and operations ("hedging"). Depending on the composition of the primary (basic) financial instruments or assets in relation to which they are issued into circulation, derivatives are divided into stock, currency, insurance, commodity, etc. The main types of derivatives are options, swaps, futures and forward contracts.
5. By guaranteeing the level of profitability financial instruments are divided into the following types: a) Financial tools with a fixed income. They characterize financial instruments with a guaranteed level of profitability upon their redemption (or during the period of their circulation), regardless of market fluctuations in the loan interest rate (rate of return on capital) on financial market.
b) Financial tools with an uncertain income. They characterize financial instruments, the level of profitability of which may vary depending on financial status of the issuer (common shares, investment certificates) or in connection with a change in market conditions financial market (debt financial instruments, with a floating interest rate "pegged" to the established discount rate, the rate of a certain "hard" foreign currency, etc.).
6. According to the level of risk, the following types are distinguished financial instruments:
a) risk free financial instruments. These usually include government short-term securities, short-term certificates of deposit of the most reliable banks, "hard" foreign currency, gold and other precious metals purchased for a short period. The term "risk-free" is to some extent conditional, since the potential financial any of the following types of risk financial instruments; they serve only to form a reference point for measuring the level of risk for other financial instruments.
b) Financial tools with a low level of risk. These include, as a rule, a group of short-term debt financial instruments, serving the market of money, the fulfillment of obligations for which is guaranteed to be stable financial the condition and sound reputation of the borrower (characterized by the term "prime borrower").
c) Financial tools with a moderate level of risk. They characterize the group financial instruments, the risk level for which approximately corresponds to the market average.
d) Financial tools with a high level of risk. These include financial instruments, the level of risk for which significantly exceeds the market average.
e) Financial tools with a very high level of risk ("speculative"). Such financial instruments are characterized by the highest level of risk and are usually used to carry out the most risky speculative operations on financial market. An example of such high-risk financial instruments are shares of "venture" (risky) enterprises; bonds with a high level of interest issued by an enterprise in crisis financial state; options and futures contracts, etc.
The above classification reflects the division financial instruments only on the most essential common grounds. Each of the considered groups of financial tools in turn, it is classified according to individual specific features, reflecting the features of their issue, circulation and redemption.
Let us consider in more detail the composition and nature of individual financial instruments, servicing operations on various types financial markets.
1. Basic financial instruments credit market are:
a) monetary assets that constitute the main object of credit relations between the creditor and the borrower;
b) checks representing a monetary document of the established form containing an order of the owner of a current account in a bank (or other credit financial Institute) on the payment of the amount of money indicated in it upon presentation. There is a nominal check (without the right of transfer and endorsement); bearer's check (which does not require an endorsement when it is transferred to another owner) and order check (a transferable check that can be transferred to another owner with the help of an endorsement - endorsement);
c) letters of credit, which are a monetary obligation of a commercial
bank, issued by him on behalf of the client-buyer to make a settlement in favor of the buyer or another commercial bank within the amount specified in it against the specified documents.
There are revocable and irrevocable letters of credit, as well as ordinary and transferable letters of credit.
d) bills of exchange, which are an unconditional monetary obligation of the debtor (drawer) to pay a certain amount of money to the owner of the bill (bill holder) after the due date specified in it. V contemporary In practice, the following types of bills are used: a commercial bill (formalizing the settlement monetary obligation of the buyer of products under a commodity loan); banking (or financial) bill of exchange (executing a monetary obligation of a commercial bank or other credit financial Institute financial credit), tax bill (formalizing the monetary obligation of the payer of a certain type of tax payment to pay within a certain period of time for its deferred payment). When making financial transactions in the credit market may be applied: an interest-bearing bill (issued for the nominal amount of the debt and providing for the accrual of interest on this amount in the amount agreed by the parties to the bill transaction); discount bill (income on such a bill is the difference between its face value and the purchase price). Finally, issued bills (they are one of the types of securities) are divided into the following types: promissory note (it assumes that the issuer of the bill is at the same time the payer on it to a specific person or by his order); bill of exchange (it assumes that its holder can order the drawer to pay the amount of the debt on it by endorsement). If a business entity's bill contains a bank guarantee, it is called an "avalized bill";
e) pledge documents. They represent a formalized debt obligation that secures the received financial or commercial credit in the form of collateral or mortgage. If the borrower violates the terms of the loan agreement, the owner of this debt obligation has the right to sell them to pay off his debt or receive the property specified in it.
e) others financial instruments credit market. These include slogans, bills of lading, etc.
2. Basic financial instruments securities market are:
a) shares. They are a security that certifies the participation of its owner in the formation of the authorized capital of a joint-stock company and gives the right to receive an appropriate share of its profit in the form of a dividend.
On the contemporary stage of development of the domestic stock market stocks are the most widely represented financial instrument, although, according to this indicator, they are significantly inferior to those of the stock market of countries with a developed market economy. As for volume financial transactions in shares, it is relatively small due to low liquidity and profitability of the predominant part of its types.
b) bonds. They are a security, indicating that its owner has deposited funds, and confirming the obligation of the issuer to reimburse him the face value of this security within the period specified in it with the payment of a fixed percentage (unless otherwise provided by the terms of issue).
On the contemporary stage of development of the domestic stock market, the number of varieties of bonds circulating on it is relatively small (in comparison with similar indicators of the stock market of countries with a developed market economy and the number of varieties of shares in circulation), however, they occupy the first place in terms of the volume of transactions (primarily due to transactions on government bonds).
c) savings (deposit) certificates. They are written
certificate of a bank (or other credit financial institution that has a license to issue them) on the deposit of funds, which confirms the right of the depositor to receive after the established period of the deposit and interest on it.
d) derivative securities or derivatives. This is a relatively new group of Securities for our stock market, which has already been reflected in legal norms. Among the main of these securities are: option contracts; futures contracts; forward contracts, swap contracts and others.
e) others financial instruments stock market. These include investment certificates, privatization securities, treasury bonds and others.
3. Basic financial instruments the foreign exchange market are:
a) foreign exchange assets that make up the main object financial transactions in the foreign exchange market;
b) a documentary currency letter of credit used in settlements with foreign trade enterprises (payments under this document are made subject to the provision of the required commercial documents to the bank: invoices, transport and insurance documents, quality certificates, and others);
c) a currency bank check, which is a written order of the bank owner of foreign currency holdings abroad to its correspondent bank to transfer the amount specified in it from its current account to the holder of the check;
d) a currency bank bill, which is a settlement document issued by the bank to its foreign correspondent;
e) a transferable currency commercial bill, which is a settlement document issued by an importer to a creditor or a direct exporter of products;
e) a currency futures contract, which is financial instrument transactions on the currency exchange;
g) a currency option contract concluded on the currency market with the right to refuse to buy or sell currency assets at a previously specified price;
h) a currency swap that ensures a parity exchange of currencies of different countries in the course of a transaction;
other financial instruments foreign exchange market (repo agreement for currency, currency mottos, etc.).
4. Main financial instruments insurance market are:
a) contracts for specific types of insurance services (insurance products) that make up the main object financial transactions with clients in the insurance market. These contracts are issued in the form of a special certificate - an "insurance policy", transferred by the insurance company to the insurer;
b) reinsurance contracts used in the formation financial relationships between insurance companies;
c) emergency subscription (emergency bond) - financial the obligation of the consignee to pay his share of the loss from a general accident during the carriage of the goods.
5. Main financial instruments the gold market are:
a) like gold financial underlying asset financial operations in this market;
b) a system of various derivatives financial instruments or derivatives used in transactions on the precious metals exchange (options, futures, etc.).
The above system of basic financial the market is in constant dynamics, caused by changes in the legal norms of state regulation of individual markets, using experience of countries with developed market economies, financial innovation and other factors.
Many of the considered financial instruments even in the practice of countries with developed market economies were introduced after their development only in the last third of the twentieth century. The development of such new types financial instruments and relevant financial technologies (collectively referred to as " financial products") deals with one of the most contemporary directions financial management - " financial engineering". American specialists in the field financial engineering - John Marshall and Vikul Bansal proposed a typical normative model for the development of a new financial product that has undergone appropriate empirical testing.
They are divided into two groups:
They are a kind of goods, and through their use it is possible to satisfy the interests of all parties. Thus, when using these assets, the following main goals are achieved, related to hedging or resource mobilization and aimed at improvement. Each category under consideration differs in its features taken into account, so it is necessary to pay attention to the study.
Essence of tools
In any activity, especially if it takes place in the market, tools act as key categories. This category came to us from the West, and cannot be interpreted unambiguously. This concept is not only often mentioned in international practice, but also in numerous regulatory documents. The term has gained more and more definitions over time as different markets have developed. In the financial part, a new direction was formed, which is called financial engineering, and a new vacancy arose "financial engineer" Among his duties is to find ways to solve the main difficulties through analysis. Currently, these tools are most commonly used by bankers, financial analysts, auditors and money managers.
The most convenient and accessible terminology is given in the state financial reporting standards, this classification not only sets out the basic concepts in an accessible way, but also provides some examples regarding instruments. The obligation acts as a kind of attitude of the parties who take part in the drafting of the contract.
Obligations may arise on several grounds, the first of which may include law or tort, and of course the contract itself. Obligation acts as a very important need to comply with the law, and in the case of a contract, it is necessary to comply with obligations. In the case of a tort, an obligation arises as a consequence of the harm that was caused to one of the parties or several parties.
We can talk about those contracts that entail a change in the financial part of the company. Therefore, categories carry an economic nature. In general, assets comprise a number of the following categories:
- Tool exchange;
In addition to them, debt instruments are quite common, which have peculiar consequences for many participants.
The statement shown indicates that two types of characteristics can be distinguished that help to give a classification:
- The transaction must contain an asset or a liability;
- The operation contains the contract form.
Before proceeding to the consideration of a financial instrument, it is important to know that the definition itself is broad, this can be easily understood by evaluating one of the most popular contracts - purchase and sale. According to this agreement, one party gives at the disposal and management of material wealth. If the buyer makes an advance payment, then the seller does not have an asset, and the buyer has the same asset, which is expressed in debt. But in this aspect it is not considered as a tool. There are also more difficult cases. For example, when, in fact, the goods have already been delivered, and an item on accounts payable appears in the balance sheet of both parties. As well as accounts receivable.
If the goods are not material values, but financial assets themselves (), then there are no changes from the general position. But it is rather difficult to call all the above situations completely indisputable.
Types of financial instruments
Credits and loans- are one of the most common in the financial market. When performing operations, an organization that acts as a lender allocates funds to the borrower. He, in turn, must return them.
Literature
Federal Law of the Russian Federation "On currency regulation and currency control" dated December 10, 2003 No. 173-FZ.
Burenin A. N. Hedging with futures contracts of the RTS Stock Exchange. M.: Scientific and technical society. acad. S. I. Vavilova, 2009.
Burenin A.N. Forwards, futures, exotic and weather derivatives. M.: Scientific and technical society. acad. S. I. Vavilova, 2005.
International monetary and financial relations / Ed. L. N. Krasavina. – M.: Finance and statistics, 2007.
International financial market / Ed. V. A. Slepova, E. A. Zvonova. M.: Master, 2009.
Smirnov I. E., Zolotarev A. N. The exchange rate as the most important concept of the "foreign exchange market" system. St. Petersburg: SPbGUEF, 2007.
Chapter 3. Credit market and its segments
3.1. Credit as a special financial instrument
The concept of "credit" comes from the Latin word "creditum", which means "loan, debt." At the same time, many economists associate it with another, close in meaning, term “credo”, i.e. “I believe”, and, accordingly, they see a debt obligation in a loan that is directly related to the trust of one entity that transferred a certain value to another. In the economic literature, credit , As a rule, it is defined as a system of economic relations that arise in the process of providing monetary or other material resources by the lender for temporary use to the borrower on the terms of repayment, urgency and payment. If the provision of funds is irrevocable and perpetual, then it is called financing.
Forms of credit are closely connected with the essence of credit relations. Depending on the loaned value, there are commodity, monetary and mixed (commodity-money) form of credit. The commodity form historically preceded the monetary form. In modern practice, the commodity form is not fundamental, the predominant form is the monetary form of credit. The commodity form is used both when selling goods by installments, and when renting property (including leasing equipment), renting things.
Depending on who is the creditor in the transaction, the main forms of credit are distinguished : commercial (economic), banking, consumer, state and international credit.
Commercial (household) loan- this is a credit provided by supplier enterprises to buyer enterprises by deferred payment for realizable values or by buyers to sellers in the form of an advance or prepayment for goods supplied. As a result, an economic entity can simultaneously act as a lender and a borrower.
Bank loan – This is a loan provided by banks to their customers in cash. Economic and financial structures (legal entities) and citizens (individuals) act as clients.
consumer credit- this is a loan provided to the population in commodity and monetary forms for the purchase of land, real estate, vehicles, and other goods for personal use. The role of a creditor here is played by both specialized financial and credit organizations and banks, as well as any legal entities that sell goods or services.
State loan- these are funds provided on loans to the state (represented by central and local authorities) to cover its expenses, or loans provided by the state itself as a creditor (the second option is less common). The emergence of public spending is associated with the implementation of economic and social programs for the development of society and the formation of a budget deficit. The population, economic and financial structures act as creditors of the state. State credit includes the provision by the state of guarantees for borrowing obligations of legal entities and individuals.
International credit- this is a loan in commodity and monetary forms, provided to each other by foreign commercial partners and states. Commodity, or intercompany, loans are used in the construction of large national economic facilities. Cash loans are provided by banks, consortiums of banks and international financial institutions and are intended for production and stabilization purposes. In modern conditions, the main form of credit is Bank loan.
The role of credit is revealed in its functions. In the theory of credit, there is no unity of views regarding the number and content of the functions of credit. However, in most cases, they include the following:
● redistributive function. Credit operations are connected, first of all, with the accumulation of temporarily free funds of the society, the redistribution of which allows investing free money capital in any sector of the economy. From industries with a low rate of return, capital is released in the form of money, and then in the form of credit is sent to industries with a high rate of profit. Thus, credit acts as a mechanism for equalizing the rate of profit. With the emergence of banks, the processes of redistribution of funds in the economy received the most adequate mechanism;
● function advancement of the reproductive process. On the basis of a loan, the continuity of the circulation of capital in society and the acceleration of the circulation of capital of each borrower are ensured, which allows him to overcome time gaps between the need for funds and their excess without freezing funds in "liquidity reserves". This function of credit involves the active use of all forms of credit (commercial, banking, consumer, etc.) and their flexible transformation into each other;
● function creation of credit means of circulation. Since its inception, credit has replaced full-fledged money with credit instruments - bills of exchange, banknotes and checks. Their use in non-cash payments, on monetary obligations significantly reduced the cash turnover, and, therefore, the distribution costs associated with the manufacture, recounting, transportation and storage of cash. Currently, the emission of money by central banks and the banking system occurs on a credit basis. Lending by banks to clientele and their refinancing by central banks determines the scale of the release of money into economic circulation, and the return of loans leads to the withdrawal of money from circulation.
A prominent representative of the capital-creative theory of credit, J. Schumpeter, introduced a provision on innovative essence of credit relations, which, in his opinion, is primary, while loans to support the current activities of companies are secondary, based on the innovative basis of credit relations, and which were the product of the activities of large banks to manage the demand for credit resources. In his opinion, from a historical and logical point of view, a loan is necessary just for innovation, it was for them that the company introduced it into their activities. They needed a loan to create a business, and at the same time, its mechanism, which appeared in the process of introducing innovations, affected the old combinations of their work 1 . According to J. Schumpeter, it is this essence of credit (issuing a loan for a project) that is the basis of the modern credit market.
In general, supporters of capital-creative theories of credit, who developed their views in the conditions of different socio-economic systems, were united by the idea of credit as a tool for stimulating production, independence of credit and its dominant role in relation to industrial capital. On the basis of the broad possibilities that they identified for the impact of credit on production, they asserted the active role of banks and credit in stimulating economic growth. They talked about the primacy of the innovation-investment component of the bank loan market (understanding it as lending to the fixed capital of companies, leading to an increase in product supply and not accompanied by an increase in inflation) in comparison with loans to working capital. The loan here is intended to advance future capital expenditures of companies ( in modern terms- issued for a project without collateral with the borrower's assets), and for banks, it is important to assess the future prospects for the company's activities and control its business for the period of lending. It is thanks to the financing of fixed capital that a bank loan stimulates the non-inflationary growth of the national economy, which is of great practical importance in modern conditions.
It is more typical for modern science to study the properties of credit through credit products of credit market participants than its economic content through the role and functions of credit in the economy, the permissible limits of its involvement in the turnover of borrowers, based on their industry characteristics 1 . In Western and domestic literature and in IFRS, credit products are considered today as financial instruments, i.e. as a relationship based on an agreement between the parties, as a result of which one party (creditor) has a financial asset, and the other party (borrower) has a financial liability.
At the same time, credit products have both characteristics common to other financial assets and individual properties. General properties of credit products include:
the creditor's claim to income or property of the debtor after the issuance of the loan;
sale of loan products by lenders in order to obtain economic benefits, which can be expressed in the form of an increase in income (due to interest and commissions on loans, the possibility of selling other products related to loan products), increasing customer confidence, improving the image of lenders, etc.;
provision by creditors of resources with the intention of holding them in their portfolio until their maturity or with the intention of subsequent sale (assignment) to third parties;
return by borrowers of received resources in cash or other financial assets.
At the same time, loan products act special type of financial assets. Here they are primarily distinguished from other financial assets returnable character placement of funds, which allows us to speak of them as debt products. Credit products are characterized by the movement of value from the lender to the borrower and vice versa. This requirement determines the temporary nature of the funds in the borrowers' turnover and the need for both creditors and borrowers to provide conditions for debt repayment. Accordingly, lenders must assess the fulfillment of these conditions and take measures to reduce risks, assessing the likelihood of repayment of loans. This involves determining (taking into account the purpose of lending) sources of loan repayment, assessing their reliability and sufficiency, and, further, structuring loan products (taking into account the purpose and sources of loan repayment and the structure of the resources of the lenders themselves). It is important that incorrectly chosen conditions for providing credit products only increase the risks of the parties due to the possible non-completion of credited operations.
An essential condition for the repayment of loans is also a system of trust between the participants in a credit transaction, which ensures the transparency of borrowers for lenders, and for borrowers - an understanding of the approaches of credit management of lenders and, as a result, allows them to correctly interpret each other's intentions, develop optimal credit decisions, taking into account the financial needs of the borrower, risks and profitability of the credit transaction for creditors.
Equity products (unlike debt products) do not imply a return of invested value to the investor, but give him the right to a share in the income (losses) of the investee and to a share in its net assets. At the same time, it should be noted that if lenders assume most of the risks of a credit transaction (typical for project lending and project financing), loan products acquire the features of equity (equity) financing. Here, creditors already participate in the distribution of profits from investment projects in proportion to their share in their financing.
The returnable nature of the loaned value implies the definition by the creditor of clear conditions for its repayment, which, first of all, are expressed in setting the terms of repayment. milestone payments and principal (which is not the case for shares and other equity instruments) and can be determined on a specific date or on the occurrence of certain events. This expresses principle of urgency of crediting. Here, we support the traditional classification of loan products, based on their division into short-term (with a maturity of up to one year), medium-term (from one to three years) and long-term (more than three years), since a loan term of up to three years is usually not enough for payback of large investment projects implemented at the expense of attracted loans.
The terms of loans act as a limiter for borrowers to find borrowed funds in circulation, stimulating them to carefully justify the size and term of attracting resources, their effective use, and at the same time as a condition for ensuring the liquidity and solvency of creditors. The terms of loans are determined by the timing of the completion of credited activities, which requires their justification by borrowers, and are initially taken into account by lenders when structuring loans, and subsequently, after loans are issued, when monitoring them in order to identify problem loans for timely taking the necessary measures. Thus, short-term loans can be provided without collateral and at a lower interest rate; long-term loans (as more risky) - secured and higher interest. At the same time, in terms of structuring investment loans, it is required to allocate periods of development and payback for the establishment of a delay in repayment of the loan for the period of development of costs, followed by a phased repayment as the facilities are put into operation.
The next principle of lending is payment, implemented through the interest rate mechanism and representing for lenders the meaning of creating financial assets, a means of preserving the loaned value and compensating for their risks, and for borrowers - a cost measure for attracting “foreign” resources, the need for their productive use in order to achieve the proper return on investment.
The payment of loans has an important impact on the financial management of borrowers in terms of choosing the best sources of financing from the standpoint of a balance of price and non-price factors. To non-price factors (from the position of borrowers - legal entities) we include:
requirements of creditors to the business reputation, creditworthiness of the borrower, its accounting (financial) statements;
the speed of granting loans;
the opportunity for borrowers to maintain the existing governance structure;
the possibility of reflecting the loan off the balance sheet and attributing the costs of raising funds to the cost of products (works, services);
obtaining additional services from creditors, a special individual approach;
formation of the company's credit history in the market.
The principle of payment is reflected in the internal regulations of creditors (for example, in documents on credit, interest policy), in contracts with borrowers, which determine the interest rate on loans, various commissions, as well as penalties for non-performance or improper performance by borrowers of contractual obligations.
The price of credit products reflects the general ratio of supply and demand in the loan capital market and depends on a number of factors, in particular: the stability of money circulation in the country and inflation expectations, the cost of resources provided by lenders to borrowers on loans, the creditworthiness of borrowers, the terms of loans and the quality of their security . However, objectively, it has lower and upper limits: the lower limit is the cost of lenders to attract resources, administrative costs and the minimum rate of return required for business development, and the upper limit is the rate of return for the relevant sector of the economy and the level of income of individual borrowers. At the same time, for loans for servicing the working capital of companies, this is the rate of return on their current economic activities, and for loans for the implementation of investment projects, this is the level of profitability of specific projects.
The principles of lending presented above receive a special interpretation in relation to such a segment of the credit market as syndicated loan market, due to the presence of several creditors. So, the principle of recurrence involves a comprehensive assessment of credit risk not by one lender, but by several lenders - members of the syndicate in accordance with the individual methodology of each. This predetermines the high reliability of syndicated loans. Therefore, they are usually provided without collateral with the assets available to the borrowers, but with the obligation of the latter not to attract new loans on more favorable terms for new creditors (in particular, secured). Information about the loan transaction becomes known to a wide range of people, which forms the public credit history of the borrower and significantly enhances the importance of timely repayment of the loan for him.
For the principle of urgency, along with the term of the loan, the period of creation of the syndicate is important due to the duration of this procedure. For this reason, syndicated loans cannot be provided promptly to the current needs of borrowers, but are usually issued to finance their medium- and long-term capital expenditures 1 , combining large amounts and long terms of funds placement with a flexible loan repayment schedule. The specificity of the next principle - payment - is manifested in the establishment of an interest rate on a loan by agreement between creditors, i.e., based on the diversification of their resources, the distribution of credit risks between them and their public reputation as members of the syndicate. Thus, interest rates on them act as indicators of market prices for the purchase and sale of long-term resources. In relation to ordinary, non-syndicated loans, they are considered to be provided on market terms to borrowers not related to creditors, and vice versa, on preferential terms - to related persons.
In addition to the above principles of lending for the organization of syndicated loan products, we highlight two more principles. This:
partnership and observance of the interests of syndicate members - syndicate members act as partners, the interests of each of them are not infringed by others, they avoid conflicts of interest among themselves within the syndicate (for example, when, being a paying agent of the syndicate, a member can become a financial advisor to the borrower or be part of one financial -industrial group with it);
publicity of the loan transaction - information about the transaction is known to a wide range of people, and not only to creditors and the borrower. This is determined by the fact that the participant - the organizer of the syndicate and the borrower invite a large circle of creditors to participate in the transaction, not all of which will eventually join the syndicate, but will receive information about each other. In addition, the parameters of transactions in the syndicated loan market are publicly available (for example, on the websites of information and analytical agencies). The openness of the transaction forms the business reputation of all syndicate participants in the market.
Based on the foregoing, a loan in its economic essence is a special financial instrument. In addition, credit transactions should be concluded on the basis of the formal norms of the legislation of the Russian Federation, the rules of the Central Bank of the Russian Federation, the Federal Service for Financial Markets and business traditions. Given the economic essence of the loan, the hallmarks of contractual relations in the credit market should be:
bilateral relations "creditor-borrower", based on the economic interest of the parties, which must be formalized in writing;
provision of funds on a loan on terms of repayment, urgency and payment, which should be reflected as essential terms of the relevant agreements (loan agreement, loan agreement, agreement for the sale of debt securities, leasing, financing against the assignment of a monetary claim, REPO, innovation, etc.). d.). This involves fixing in contracts the size and conditions for granting loans (the purpose of the loan, the timing of its repayment, ways to ensure that the borrower fulfills its obligation), the borrower's obligation to repay the loan and pay interest (the amount of interest rate, the procedure for accruing and paying interest, methods of repaying the loan), other rights and obligations of the parties and the procedure for resolving disputes. At the same time, the agreements should provide for the repayment by the borrower of the loan and interest on it in cash and (or) other financial assets, and the terms for their repayment should be set taking into account the terms for the borrower to receive income;
registration of the creditor's rights to ensure the fulfillment of the debtor's obligations by the methods provided for by the Civil Code of the Russian Federation (Part I, Chapter 23) and acceptable in relation to a specific creditor, borrower and specific credit transaction (pledge, surety, bank guarantee, their combination with each other, etc.);
the obligation of the borrower to use the funds received for the intended purpose specified in the agreement, which should ensure the return of funds to the creditor;
the right of the parties to refuse to issue / receive a loan in the presence of circumstances indicating non-repayment of the loan, its misuse, and other circumstances stipulated by the agreement.
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It is possible to single out two specific features that allow one or another procedure, operation to be qualified as related to a financial instrument: the basis of the operation should be financial assets and liabilities; the transaction must be in the form of a contract.
1. Financial instruments. Essence and classification of financial instruments
When analyzing investment activity in general, and investment processes in the securities market, in particular, it is necessary to include the concept of a financial instrument among the main terms.
In International Financial Reporting Standards, a financial instrument is any contract that simultaneously gives rise to a financial asset for one party and a financial liability or equity instrument for the other party.
The definition of a financial instrument refers only to those contracts that result in a change in financial assets and liabilities. These categories are not of a civil law, but of an economic nature.
Financial assets include:
cash (cash on hand, as well as on settlement, currency and special accounts);
a contractual right to demand cash or another financial asset from another company (for example, receivables);
· a contractual right to exchange financial instruments with another company on mutually beneficial terms (for example, an option on bonds);
equity instrument of another company (shares, shares). A financial liability is any obligation under a contract:
exchange financial instruments with another company.
A share instrument is a way of participating in the capital (authorized fund) of an economic entity.
In addition to equity instruments, a significant role in the investment process is played by debt financial instruments - loans, loans, bonds - which have specific features, which, in turn, entail corresponding consequences for the issuers of these instruments (lenders) and instrument holders (borrowers).
So, we can distinguish two specific features that allow one or another procedure, operation to be qualified as related to a financial instrument:
· the basis of the transaction should be financial assets and liabilities;
The operation must be in the form of a contract.
Therefore, financial instruments are, by definition, contracts and can be classified accordingly. All financial instruments are divided into two large groups - primary financial instruments and derivatives.
2. Primary financial instruments
Primary financial instruments are instruments that with certainty provide for the purchase (sale) or delivery (receipt) of some financial asset, as a result of which mutual financial claims of the parties to the transaction arise. In other words, the financial assets resulting from the proper execution of these contracts are predetermined. Such assets can be cash, securities, accounts receivable, etc.
Primary financial instruments include:
Loan agreements
loan agreements;
bank deposit agreements;
Bank account agreements
financing agreements against the assignment of a monetary claim (factoring);
Financial lease agreements (leasing);
contracts of guarantee and bank guarantee;
· contracts based on equity instruments and cash.
Loan agreement. Under a loan agreement, one party (lender) transfers money or other things into the ownership of the other party (borrower), and the borrower undertakes to return to the lender the same amount of money (loan amount) or an equal amount of other things received by him of the same kind and quality.
A loan agreement is a specific version of a loan agreement, the lender under which is a bank or other credit organization. At the same time, the loan agreement has certain features: the subject of the loan agreement can only be money; an obligatory element of the agreement is the condition on the payment of interest for the use of the loan.
Bank deposit agreement. Under a bank deposit (deposit) agreement, one party (bank), which has accepted the amount of money (deposit) received from the other party (depositor), undertakes to return the deposit amount with interest on the terms and in the manner prescribed by the agreement. Such an agreement is also a type of loan agreement, in which the depositor acts as the lender, and the bank acts as the borrower. The bank deposit agreement does not allow settlement transactions for goods (works, services), and at the end of the agreement, the deposit amount is returned to the lender.
Financing agreement against the assignment of a monetary claim (factoring). Under a factoring agreement, one party (financial agent) undertakes to transfer funds to the other party (client) against the client's (creditor's) monetary claim against a third party (debtor) arising from the client's provision of goods (performance of work or provision of services) to a third party, and the client undertakes to assign this monetary claim to the financial agent.
Financial lease (leasing) agreement. Under a lease agreement, the lessor undertakes to acquire ownership of the property specified by the lessee for a fee for temporary possession and use.
Contracts of guarantee and bank guarantee. Common to all the contracts described above was that the result of their execution was a direct change in the assets and liabilities of counterparties. Equity instruments and money. In the previous classifications, equity instruments and cash were classified as financial instruments.
3. Derivative financial instruments
A derivative financial instrument is an instrument that provides for the possibility of buying (selling) the right to acquire (supply) an underlying asset or to receive (pay) income associated with a change in some characteristic parameter of this underlying asset. Therefore, unlike a primary financial instrument, a derivative does not imply a predetermined transaction directly with the underlying asset.
The basis of many financial instruments and transactions with them are securities. A security is a document certifying, in compliance with the established form and obligatory details, property rights, the exercise or transfer of which is possible only upon presentation of this document. Derivative financial instruments include:
· futures contracts;
· forward contracts;
currency swaps;
Interest rate swaps
financial options;
REPO operations;
warrants.
Forward and futures contracts are contracts for the sale and purchase of a commodity or financial instrument for delivery and settlement in the future. The owner of a forward or futures contract has the right to: buy (sell) the underlying asset in accordance with the conditions specified in the contract and (or) receive income due to changes in prices for the underlying asset. Thus, the subject of bargaining in such agreements is the price.
Futures contracts are essentially a development of forward contracts. Depending on the type of underlying asset, futures are divided into financial and commodity.
Forward and futures contracts are essentially so-called hard deals, i.e. each of these contracts is binding on the parties to the contract. However, these two types of contracts can differ significantly in their goals. A forward contract is most often concluded for the purpose of real sale (purchase) of the underlying asset and insures the supplier and the buyer against possible price changes, i.e. The main motive for the deal is the desire of the parties for greater predictability of the consequences of the deal. In the case of a futures contract, it is often not the sale (purchase) of the underlying asset that is important, but the gain from price changes, i.e. arrived. Thus, futures contracts are characterized by speculation and a greater amount of risk. On the other hand, the nature of hedging is more characteristic of a forward contract. Hedging (as opposed to speculation) is understood as a transaction of purchase and sale of special financial instruments, with the help of which losses from changes in the value of the hedged object (assets, liabilities, transactions) are partially or fully compensated.
In addition, there are other differences between futures and forwards. A forward contract is “pegged” to an exact date, and a futures contract is “pegged” to the execution month, and the change in prices for goods and financial instruments specified in the contract is carried out daily throughout the entire period until they are executed. Forward contracts are specified, futures contracts are standardized. In other words, any forward contract is drawn up in accordance with the specific needs of specific clients. Therefore, forward contracts are mainly objects of over-the-counter trading, while futures contracts are traded on futures exchanges, i.e. there is a constant liquid market for futures. Therefore, if necessary, the seller can always adjust his own obligations to deliver goods or financial instruments by buying back his futures. The efficiency of the functioning of the futures market, its financial stability and reliability are ensured by the clearing system, within which market participants are registered, the state of their accounts is monitored and they deposit guarantee funds (in the form of collateral), and the amount of winnings (losses) from participation in futures trading is calculated. All transactions are executed through the clearing (settlement) house, which becomes the third party to the transaction - thus, the seller and the buyer are released from obligations directly to each other, but for each of them there are obligations to the clearing house.
The most widespread futures contracts are in the field of trade in agricultural products, metal products, oil products and financial instruments.
An option (the right to choose) is a contract concluded between two parties - the seller (issuer) and the buyer of the option (its holder). The holder of the option acquires the right to execute the contract within the period specified in the terms of the option, or sell them to him (sale option), sell the contract to another person, or refuse to execute the contract.
An option is one of the most common financial instruments in a market economy. Formally, options are a development of futures, but unlike futures and forward contracts, an option does not require the sale (purchase) of the underlying asset, which, under unfavorable conditions, can lead to significant losses.
A feature of the option is the fact that as a result of the operation, the buyer does not acquire financial assets or goods themselves, but only the right to purchase (sell) them. Depending on the types of underlying assets, there are several types of options: on corporate securities, on government debt, on foreign currency, commodities, futures contracts and stock indices.
The right to preferential purchase of the company's shares (share option) is a specific derivative financial instrument, the introduction of which was initially associated with the desire of shareholders to increase the degree of control over the joint-stock company and counteract the decrease in the share of income due to the emergence of new shareholders with an additional issue of shares. This security indicates the number of shares (or part of a share) that can be purchased for it at a fixed price - the subscription price. A similar procedure is important, for example, when transforming a closed joint-stock company into an open company. The rights to preferential purchase of shares as securities circulate on the stock market independently, while their market price may differ significantly from the theoretical one, which is primarily due to investors' expectations regarding the investment attractiveness of the shares of this company. the market value of the right to purchase, in which case investors can earn additional income. The main significance for the company issuing a financial instrument of this type is due to the fact that the process of buying shares of this company is intensified.
A warrant is a security that gives the right to buy (sell) a fixed number of financial instruments within a certain period of time. In the literal sense, a warrant means a guarantee of some event (in this case, the sale or purchase of a financial instrument). Thus, the purchase of a warrant can be regarded as the implementation by the investor of a strategy of caution and the desire to reduce risk in the case when the quality and value of securities, in the opinion of the investor, are insufficient or difficult to determine.
There are various types of warrants in the stock market. A typical option is for a potential warrant holder to acquire the ability to buy a specified number of shares at a specified price and within a specified period. In addition, there are perpetual warrants that make it possible to buy a financial instrument at any time. The warrant has no date and no redemption value. A warrant does not give its owner the right to interest, dividends, and its owner does not have the right to vote in decision-making, unlike the owner of a share. A warrant may be issued simultaneously with other financial instruments, and thereby increase their investment attractiveness, or separately from them. In any case, after some time, the warrant begins to circulate as an independent security - in this case, possible operations with it can bring both income and loss. Unlike purchase rights, which are issued for a relatively short period of time, a warrant can be valid for several years. As a rule, warrants are issued by large firms and relatively rarely - usually warrants are issued together with a bond issue of the issuing company, which achieves both the attractiveness of the loan and the possibility of increasing the company's authorized capital in the event of the execution of warrants.
Swap (exchange) - an agreement between two subjects of the financial market for the exchange of liabilities or assets in order to reduce the risks and costs associated with them. The most common types of swaps are interest rate and currency swaps. Swaps provide an opportunity to combine the efforts of two clients (enterprises) to service the received loans in order to reduce the costs of each.
REPO operations - an agreement on borrowing securities against a guarantee of funds or on borrowing funds against securities. This agreement is sometimes referred to as a securities repurchase agreement. This agreement provides for two opposite obligations for its participants - the obligation to sell and the obligation to purchase. A direct REPO transaction provides that one of the parties sells a package of securities to the other party with an obligation to buy it back at a predetermined price. The repurchase is carried out at a price higher than the original one. The difference between prices, reflecting the profitability of the transaction, is usually expressed as an annual percentage and is called the REPO rate. The purpose of the direct REPO operation is to attract the necessary financial resources. The reverse REPO transaction involves the purchase of a package with the obligation to sell it back; the purpose of such an operation is to allocate free financial resources. REPO transactions are carried out mainly with government securities and are classified as short-term transactions - from several days to several months. In a certain sense, a repurchase agreement can be viewed as a secured loan.
An analysis of the main financial instruments allows us to draw the following conclusions regarding their purpose: financial instruments are designed to implement the following four main functions:
· hedging;
· speculation;
· mobilization of sources of financing, including investment activities;
· facilitating transactions of a current nature (with primary financial instruments dominating).
conclusions
In International Financial Reporting Standards, a financial instrument is any contract that simultaneously gives rise to a financial asset for one party and a financial liability or equity instrument for the other party.
The definition of a financial instrument refers only to those contracts that result in a change in financial assets and liabilities. These categories are not of a civil law, but of an economic nature.
Therefore, financial instruments are, by definition, contracts and can be classified accordingly. All financial instruments are divided into two large groups - primary financial instruments and derivatives.
Primary financial instruments are instruments that with certainty provide for the purchase (sale) or delivery (receipt) of some financial asset, as a result of which mutual financial claims of the parties to the transaction arise.
A derivative financial instrument is an instrument that provides for the possibility of buying (selling) the right to acquire (supply) an underlying asset or to receive (pay) income associated with a change in some characteristic parameter of this underlying asset.
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2. Shabalin A.N. Investment design. - M.: MFPA, 2004. - 139 p.
3. Tkachenko I.Yu. Investments. - M .: Information Center "Academy", 2009. - 240 p.
4. Kovaleva V.V. Investments. – M.: Prospekt, 2004. – 440 p.
When is a loan justified? Are there situations where the use of credit funds is beneficial? Judging by bank advertising, loans are always for the benefit of mankind. But we are adults. Let's try to bring out some situations when a loan is acceptable using the example of https://turbomoney.kz/, while excluding all sorts of unbridled "Wishlist". The common features of such loans will be the inability to pay for anything in the required time from savings and the absolute need to purchase this “something”.
Loan to buy a home
This is an extremely common and, most importantly, fairly justified loan. Buying a home in modern conditions, except on credit, is beyond the means of most of our compatriots. But it is a mortgage loan that can save many people from problems, both family, organizational, and purely psychological. Moreover, investing money in real estate is profitable, since over the past two decades, housing has been constantly rising in price, at a rate that significantly outpaces inflation.
Credit for treatment
The need to use borrowed funds for the treatment of oneself or a loved one is not an uncommon need. It is desirable, of course, to acquire insurance and some kind of reserves in advance, but what to do if they are not enough or simply not there for some reason? Here you already have to take such a serious step as a loan.
Loan to pay for education
Our knowledge is our only real asset that is not subject to inflation. Although modern education has a highly controversial effectiveness, a good formal education is not superfluous. It is very difficult to measure the benefit from this action in terms of money. Therefore, in the case of using credit funds to pay for tuition, everything should be thought out very carefully and how it should be calculated. What education will give you, will you be able to earn more with it, how much, including interest on the loan, will this education cost you, how long will it take to pay off the loan, etc. You can’t make such decisions spontaneously, otherwise you risk wasting money and time.
Savings loan
Strange as it may seem, but this is also quite real. How can we save anything with a loan if we pay the credit institution quite decent money on top of what we took?! This is possible, for example, if we purchase something with which we can reduce our costs or increase our income. It can be some kind of meters for water and light (calculate carefully - our housing and communal services are happy to make those who purchase meters pay more than others) or some kind of tool with which your work will become more efficient, and, accordingly, your earnings will increase. It is possible to save money by purchasing on credit some goods at wholesale prices in large quantities, which you and your family will use for several years.
Credit is not always bad
In many situations, a loan is a tool with which a reasonable person can solve their problems much more efficiently and with less loss, or vice versa, make some kind of breakthrough in well-being.
