Finance refers to the economic activities in which banks, securities or insurance companies raise funds from market entities and lend them to other market entities. Broadly speaking, all capital flows generated by the government, individuals, organizations and other market entities through raising, distributing and using funds can be called finance. Therefore, not only the financial industry, but also the government's finance, the behavior of industrial enterprises and personal financial management are all part of finance. Finance can be regarded as three economic behaviors: fund raising and distribution (financing), investment and financing (borrowing money to buy stocks). It refers to the issuance, circulation and withdrawal of money, the issuance and recovery of loans, the deposit and withdrawal, and the exchange of foreign exchange.
I. Basic introduction
Loan refers to a form of credit activity in which banks or other financial institutions lend monetary funds at a certain interest rate and must return them. The simple and popular understanding is to borrow money with interest.
Loans in a broad sense refer to loans, discounts, overdrafts and other borrowing funds. Banks put concentrated money and monetary funds out through loans, which can meet the needs of social expansion and reproduction and promote economic development; At the same time, banks can also obtain loan interest income and increase their own accumulation.
Second, the principle of sex
The "three principles" refer to safety, liquidity and efficiency, and are the fundamental principles of commercial banks' loan operation. Article 4 of People's Republic of China (PRC) Commercial Bank Law stipulates: "Commercial banks should operate independently, bear their own risks, be responsible for their own profits and losses, and be self-disciplined, and take safety, liquidity and efficiency as their operating principles."
1. Loan security is the primary problem faced by commercial banks.
2. Liquidity refers to the ability to recover the loan according to the predetermined period or realize it quickly without loss of land, so as to meet the needs of customers to withdraw deposits at any time.
3. Efficiency is the basis of sustainable operation of banks.
For example, if a long-term loan is issued, the interest rate will be higher than that of a short-term loan, and the benefit will be good. However, if the loan term is long, the risk will increase, the security will decrease and the liquidity will weaken. Therefore, the "three natures" should be harmonious, so that there can be no problem with the loan.