Interest is the use fee of money in a certain period of time, and it refers to the reward that money holders (creditors) get from borrowers (debtors) for lending money or monetary capital. Including deposit interest, loan interest and interest generated by various bonds.
Under the capitalist system, the source of interest is the surplus value created by hired workers. The essence of interest is a special transformation form of surplus value and a part of profit.
definition
1. Funds other than the principal generated by deposits and loans (different from "principal").
2. The abstract interest point refers to the value added when monetary funds are injected into the real economy and returned. Generally speaking, interest refers to the remuneration paid by the borrower (debtor) to the lender (creditor) for using the borrowed currency or capital. Also known as the symmetry of sub-fund and parent fund (principal). The calculation formula of interest is: interest = principal × interest rate × deposit period (i.e. time).
Interest is the reward for the fund owner to lend the fund, which comes from a part of the profits formed by the producer to use the fund to play its operational functions. Refers to the value-added amount brought by monetary funds injected into the real economy and returned. The calculation formula is: interest = principal × interest rate × deposit term × 100%.
3. Classification of bank interest
According to the different nature of banking business, it can be divided into bank interest receivable and bank interest payable.
Interest receivable refers to the remuneration that the bank obtains from the borrower by lending to the borrower; It is the price that the borrower must pay for using the funds; This is also part of the bank's profits.
Interest payable refers to the remuneration paid to depositors by banks to absorb their deposits; This is the price that banks must pay to absorb deposits, and it is also part of the bank's cost.
Generation factor
Delayed consumption
When the lender lends interest money, it is equivalent to delaying the consumption of consumer goods. According to the principle of time preference, consumers will prefer current goods to future goods, so there will be positive interest rates in the free market.
Expected inflation
Inflation will occur in most economies, representing a certain amount of money, and fewer goods can be purchased in the future than now. Therefore, the borrower needs to compensate the lender for the losses during this period.
alternative investment
Lenders can choose to invest their money in other investments. Due to the opportunity cost, the lender lends money, which is equivalent to giving up the possible return on other investments. Borrowers need to compete with other investments for this fund.
investment risk
Borrowers are at risk of bankruptcy, absconding or default at any time, and lenders need to charge extra fees to ensure that they can still get compensation under these circumstances.
liquidity preference
People will prefer that their funds or resources can be traded immediately at any time instead of spending time or money to get them back. Interest rate is also a kind of compensation for this.