The essence of interest refers to the remuneration that currency holders (creditors) receive from borrowers (debtors) for lending currency or monetary capital.

Includes deposit interest, loan interest and interest on various bonds. Under capitalism, the source of interest is the surplus value created by wage workers. The essence of interest is a special transformation form of surplus value and is a part of profit.

In abstract terms, interest refers to the value-added amount brought about when monetary funds are injected into and returned to the real economic sector. To put it less abstractly, interest generally refers to the remuneration paid by the borrower (debtor) to the lender (creditor) for the use of borrowed currency or capital.

Extended information:

The market functions of interest are as follows:

1. The function of influencing corporate behavior

As a cost of capital occupation, interest Directly affects the level of economic benefits of the enterprise. In order to reduce costs and improve efficiency, enterprises should do everything possible to reduce capital and compare the costs of various financing methods in the financing process. If enterprises in the whole society regard saving interest expenses as a common behavior, then the efficiency of economic growth will definitely improve.

2. Functions that influence residents’ asset selection behavior

With the continuous improvement of the actual income level and savings rate of residents in our country, asset selection behavior has emerged as the times require. The increase in financial instruments provides an objective basis for residents' asset selection behavior, and interest income is the main motivating factor for residents' asset selection behavior. Judging from China's current situation, the high savings rate has become a major feature of China's economy, providing a solid foundation for rapid economic growth. Residents' various asset selection behaviors motivated by interest income are conducive to macroeconomic control. realization.

3. The function of influencing government behavior

Since interest income is closely related to the economic interests of deficit and surplus departments, the government can also use it as an important economic lever to regulate economic operations. For example, if the central bank takes steps to lower interest rates, more funds will flow to the capital market. When interest rates rise, money will flow out of capital markets. If the government raises funds through credit, it can issue government bonds with higher interest rates than bank deposits over the same period, and absorb private funds for various fiscal expenditures.

Baidu Encyclopedia-Interest