Credit And the Economic Substantiation For Interest On Credit

Abstract

To a considerable extent, the stimulating role of credit in the process of social reproduction depends on the substantiation of bank interest. In the course of the economic reform being carried out, the principles of an active credit policy, capable of exerting a stimulating influence on the economic performance of the enterprise, are being formed. The complex of measures (making bank interest dependent on the performance of enterprises, raising the general level of interest rates, and differentiating them according to economic factors, etc.), instituted in keeping with the decisions of the September (1965) Plenum of the CPSU Central Committee and the 23rd Party Congress, has created conditions for a certain increase in the significance of interest in the economic accountablility system of enterprises and in credit relations between enterprises and the bank. Nonetheless, the rise in the average interest level for credit, and a certain differentiation of it for enterprises that have been converted to the new system of management, have not yet made interest an effective lever for influencing production or a criterion for the effective application of credit resources.