Try To Discuss The Impact Of Credit On The Financial Crisis

The term of credit has a long history. Inspecting historically, credit belonged to the scope of social ethics, and its basic meaning mainly referred to the trust. With the development of the commodity production and exchange, more and more credit was given to the economic implications. The credit which we are talking about now is mainly on its economic significance, and its nature is a lending relationship. Such lending practices had been able to happen depends largely on the credit side of the trust, which is the ability to repay the trust on the credit side to the trusted party. In the modern market economy, the foundation of trust is becoming weaker. Credit side, driven by high profits, and gradually neglected to maintain the foundation on which the credit will trust their faith but on the various elements of instability, resulted in credit spread. Without a solid foundation of credit expansion, the direct consequence is the outbreak of the credit crisis, and thus could lead to turmoil in financial markets, meanwhile may lead to financial crisis. In view of this, this paper focuses on the relation of credit and financial crises.This paper will analysis this relationship from three aspects. Firstly, it will examine the impact of credit on the financial crisis. Credibility is the basis of credit side of the trust, but in the current market economy, the incidence of the various credit is not completely based on the trusted parties ability to pay, but based on other factors of instability. Once the economic situation reversed, credit crisis will be triggered extremely due to the unstable basis, and thus lead to financial crises.The second part will begin from a credit feature perspective. With the credit position in the market economy increased gradually, the role of the credit for economic development become more and more prominent. In the process of economic development of the market, credit not only save the transaction costs, facilitate the circulation of commodities, and various of credit forms and credit instruments are used to put a lot of idle capital together to expand production, and greatly improved productivity. But the credit of the negative effect on market economy can not be ignored. This paper is to try to find some intrinsically links between credit and financial crisis. This paper argues that the financial crisis is still deep-seated the basic contradictions of capitalism. In the process of the financial crisis occurred frequently, credit played a crucial role. Credit not only intensified the contradiction between the socialization of production and private ownership, but also greeted the capitalist profit-taking to an extreme nature. With the promotion of economic development, credit planted the seeds of the financial crisis.The third aspect started from the perspective of self-reproduction to discuss the relations between the credit and financial crisis. A very important feature is that the financial markets and the financial instruments get rapid development, and this trend is being enhanced. This largely related to the development of credit. However, the self-reproduction of the credit for the rapid development conceals potential problems. In pursuit of more profit, financial engineers, derived a lot of innovative financial products from basic financial instruments, and this so-called "innovation" will continue to proceed, this will inevitably lead to the virtual economy being greatly inflated. When the virtual economy and real economy seriously out of line, they will cause financial crisis.Therefore, this paper argues, to prevent the financial crisis, we must strengthen credit management. First of all, we must make the measures to strengthen the credit risk for awareness, so that credit creation based on the more solid basis; Following, we must prevent the intensification of contradictions transferred to finance through credit forms and credit instruments; Again, to prevent excessive expansion of credit and control the credit scale in moderate range,...