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TOPIC: Essence and Functions of Finance

• 1. Essence and importance of finance
• 2. Functions of finance
• 3. Use of finance in social reproduction
• 4. Development of finance

FINANCE

• F I N A N C E
• Finance is a system of economic relations connected with the formation, distribution, and use of centralized and decentralized monetary funds in order to ensure the fulfillment of state functions and tasks as well as the conditions for expanded reproduction.
• Finance is a set of economic relations related to the formation and management of monetary resources�(distribution, redistribution, and control).

FEATURES OF FINANCE

• The socio-economic essence of finance, patterns of development, the scope of commodity–money relations, and its role in social reproduction
• ⬇️
• are determined by the economic structure of society, the nature and functions of the state

CHARACTERISTIC FEATURES OF FINANCE

• The movement of monetary funds is usually one-directional
• Formation of centralized and decentralized monetary funds
• Regulation of relations by the state
• Distributional nature of relations based on real money circulation and legal norms or business ethics

Centralized monetary funds

• Funds formed at the level of the state and local self-government bodies
• Decentralized monetary funds
• Funds formed at the level of economic entities

Finance expresses monetary relations arising between

• Enterprises during the sale of products
• Enterprises and their higher authorities
• Enterprises and the state
• The state and citizens
• Enterprises, citizens, and extra-budgetary funds
• Within the budget system
• In insurance relations
• In the continuous circulation of enterprise funds

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Why is finance necessary?�

• To distribute national income
• It plays a key role in the formation of national income
• It affects production, distribution, and consumption
• For the functioning of the modern economy
• To ensure participation of productive forces at the macroeconomic level
• To obtain information about the economic situation
• It forms the country’s financial resources
• It is closely linked to financial policy

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QUESTIONS�

• Where does the state obtain financial resources from?
• For whose interests are these funds used?

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• FUNCTIONS OF FINANCE
• Distribution
• Control
• These functions are implemented simultaneously and ensure the distribution of GDP and national income, as well as control over the distribution process.

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DISTRIBUTION FUNCTION�

• Covers various levels of the economy
• A multi-stage process
• Primary distribution of national income
• Ensures economic development
• Improves the living standards of the population

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CONTROL FUNCTION

• Control over GDP
• Control over the movement of financial resources
• Ensures work quality and efficient use of resources
• Covers both production and non-production sectors
• Monitors compliance with legislation
• Implemented through the execution of revenues and expenditures

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FUNCTIONS OF FINANCE (MECHANISM)�

• Implemented through the financial mechanism
• A system of financial relations
• Procedures for using monetary funds
• Financial planning methods
• Management forms
• Financial legislation
• Under conditions of deepening market reforms, a qualitatively new financial mechanism is applied.

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SOCIAL REPRODUCTION�

• Production
• Exchange
• Distribution
• Consumption

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Participants in the reproduction process divide their income into two parts:

• Consumption fund
• Accumulation fund
• However, in this process, the state withdraws its share�(taxes, loans, insurance, etc.).

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TOTAL SOCIAL PRODUCT

• Value of the means of production used in production�(tools and objects of labor)
• National income�(value of labor power and surplus product)

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CONSUMPTION FUND

• Social consumption fund
• Personal consumption fund
• Personal savings funds
• The main part of social consumption funds is implemented through the State Budget.�These indicators reflect the level of the country’s development.

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• THANK YOU FOR YOUR ATTENTION!