Finance as an economic category - the most important part of the world economic system.In fact, they are a tool through which the redistribution of GDP, and is controlled by the establishment and operation of a variety of funds.Many people combine the concept of finance and money, but the decision is fundamentally wrong.Finance as an economic category is a narrower concept, as, unlike monetary relations, they reflect only those cash flows that go through special funds, and does not take into account the interaction of ordinary people.Thus, the essence of finance and their functions have their own characteristics as compared with the money.Let us dwell on this matter.
Finance as an economic category have several major functions:
- distribution - with the help of the funding comes all economic entities needed cash.The most obvious in this case is an example of the state budget, which was originally going to tax citizens of a certain country.After the budget will be replenished from all possible sources of financing, begins distribution of funds between the various organizations, ministries and other economic structures.This is the function of Finance allows all citizens of the state to get its share of gross domestic product, and the state - to carry out their responsibilities to the public.
- The monitoring function allows you to receive information on the production process as a whole and its various components.It is this feature allows you to receive information and make decisions about changing the situation.
- Fiscal - is the withdrawal of the state from citizens and businesses
part of their income in order to keep the state apparatus and to carry out their functions.It is due to the payment of taxes is the formation of the state budget, which is distributed after the defense, education, medicine, science and culture, as well as other parts of our lives.
- stimulating function is the tax rate, different for different categories of citizens and businesses.In addition, it implies the existence of incentives and penalties, which help not only in time to collect taxes, but also contribute to the development of various sectors of the economy.As an example of this feature can result in a government program aimed at developing small business.Many entrepreneurs can now work under the simplified taxation system, as well as receive government grants and subsidies.
It finances as an economic category is a reflection of society and the state, giving instant signals in the event of unfavorable developments.Competent approach to financial relations and permanent control over them will help the government to avoid unforeseen situations and economic crises.
As you can see, the role of finance in the economy is enormous.