Gaukhar Dauletbayeva,

Master of Science in International Finance Management,

Kostanay State University (Kazakhstan)

THEORETICAL VIEW OF THE FINANCIAL SYSTEM

A contribution of a financial system to all-economic development of the country it is roughly discussed for a long time in economic literature, and some authors see it as a decisive factor of development of real sector of economy [16, P. 130]. Pilgrim gives the accurate formulation: " Out of different infrastructural facilities which are a pre-requisite for a balanced growth of the economy, development of a proper and effective infrastructural system ist he most important one" [2, P. 56]. Exists nevertheless and other opinion that development of a financial system is necessary, not the optional prerequisite for economic development of the country [1, P. 790].

The short literary review about formation of the theory of finance which originate from works of last years is given below.

When considering theoretical works of last century it is possible to note that in classical national economy it wasn't developed the systematic analysis about a contribution of banks, the exchanges and money to the economic growth of the state. Only some classics as Smith (1911) and MacLeod (the end of the 19th century) hold the opinion that banking can actively promote the economic growth of the country [14, P. 289]. According to MacLeod banking is " Manufactory of Credit ", he saw assistance of economic activity in the bank credit. According to Marx (1894) banks and the exchanges represent the loan capital and promote, thus, to production expansion [15, P. 220]. It considers activity of financial sector as a result of return from real economic activity [8, P. 347].

The German oldest historical schools dealt from the emergence the beginning by issues of development of financial sector. So, Hildebrand (1910) in an eoriya of step development "A subsistence economy - Monetary economy - Crediting" claims that in development got new and for economic development considerable function. In treatises of representatives of new historical school as Shumpeter (1911) in "The theory of economic development" and Sombart (1927) in "Modern capitalism", represent still now a perennial spring for an economical and theoretical material and exact structurization.

Shumpeter emphasized the significant contribution of financial sector and force of human invention to economic development of the state [13, P. 110]. Sombart in turn explained value of savings as a basis for formation of the potential capital and the bank credit as the most important condition of development of capitalism [7, P. 9]. Level of financial development it is closely interconnected with GDP growth per capita, a rate of redistribution of the capital and efficiency of using of the capital [15, P. 218].

(1931) about a financial system it is considered Machlap's works the pioneer of the theory of financial intermediation. It is important to note thus what exactly he established a role of all-economic financing and need of transfer of economic savings through credit markets and the capital [3, P. 32].

Keynes pointed to insignificant influence of a financial system on the long-term growth of economy of the state. It carried all-economic the resource capital to constant indicators and only to an investment played a key role which defined an all-economic exit of the capital. Keynes's also late works about economic growth indicated influence of financial sector only in passing since investments in comparison with savings it was considered as an initial factor. In his opinion, the financial sector is able to provide liquid means which investors request.

After 1945 hold the opinion that financial development of the country is result of development of real sector of economy. In the theory of financial intermediation of Gyurlya / Sheu (1955) distinguish between surplus of resources (savers) and their deficiency (investors) and point to influence of financial intermediation at data of savers and investors together [4, P. 523].

McKinnon and Sheu entered new concept of economic literature of "financial repression" which expresses now concept of excessive regulation of financial sector. Authors were opinions that excessive regulation makes braking impact on formation of savings and on efficiency of redistribution of resources. To instruments of financial repression refer, first of all, establishment of the top interest rate for deposits and the credits, creation of special conditions for certain borrowers, formation of legislative minimum reserves, and also introduction of special taxes and duties which burden financial property and a financial transfer [3, P. 42]. Reaction of financial sector to regulation are the financial innovations causing development of shadow economy and "prosperity" of the informal financial market. Thus, the central point of statements of school of McKinnon and Sheu lies in false signals of economic limitation of resources and deterioration of their all-economic redistribution through distortion of their market cost. Works of this school are a basis for the theory of finance (Theory of Finance).

Scientists of university of of Okhayo (OSU) submitted the theory of finance (Theory of Finance) which underlines as value of financial intermediation for economic development of the country, and the reason of a poor development at excessive state intervention. In many publications OSU point to discrimination by financial institutions financially poor and weak through selective credit policy [11, P. 71]. They prove the look the following arguments [11, P. 227]:

- Because of insufficiency of information and insignificant savings favorable services of the informal financial market are provided for segments of the population with the low income only in very limited quantity.

- Despite subventsionny credit programs and the established credit quotas for the purpose of stimulation poor, possibility of receiving the credit for them remains difficult. Banks рационируют these groups of the population through encumbrance by their interest-free expenses (in the form of expectations, bribes or red tape and bureaucracy) since they can't include all general financial expenses in credit cost. Concentration of the "cheap" credits in hands of the elite is a consequence of that [11, P. 60].

- Above-mentioned arguments conduct to decline in production of a financial system. On the one hand, financial institutions have no incentives to active involvement of investors, with another – distributive function of financial institutions refuses. Instead of minimizing irrevocability of the credits, banks aim at increase in credit quotas and obligations. Weakening of internal incentives for development of innovative credit technology is a consequence of that [12, P. 96]. Representatives of the theory of finance (Theory of Finance) offer the following actions:

First, the state restrictions in the field of percentage policy and policy of firm of financial institutions have to be cancelled. Smaller dependence of financial institutions on political interests of various public groups and simplification of receiving the credit poor thanks to growth of volume of debt of target groups and a gain of their trust financial the markets and to institutes is result of these actions [11, P. 126].

Secondly, feature of this theory is the assessment of a role of the informal financial market. She sees in them important incentive of financial and technological innovations. Besides the informal markets shouldn't be suppressed or ignored, and have to be attracted in process of reforming of the financial market [9, P. 188].

References:

1. Arestis, P. / Demetriades, P. (1997): Financial Development and Economic Growth: Assessing the Evidence, in: Economic Journal, Vol. 197, P. 783-799

2. Bhattacharyay, B. (1988): Development of Financial Infrastructure: An International Com-parison, in: Saving and Development, Vol. 12, 307- 319

3. Graff, M. (2000): Finanzielle Entwicklung und reales Wirtschaftswachstum, Tubingen: Mohr Siebek

4. Gurley, J. / Shaw, E. (1955): Financial Aspects of Economic Development, in: American Economic Review, Vol. 45, P. 515-538.

5. Hildebrand, B. (1864): Natural-, Geld- und Kreditwirtschaft, in: Jahrbucher fur Nationalokonomie und Statistik, Bd. II, S. 1-24

6. King, R. / Levine, R. (1993): Financial Intermediation and Economic Development, in: Mayer, C./ Vives, X. (eds), Capital Markets and Financial Intermediation, Cambrige, P. 156-189

7. Keynes, J. (1936): The General Theory of Employment, Interest and Money, London: Harcourt Brance

8. Marx, K. (1885; 1963): Das Kapital, Bd. II, Berlin: Dietz

9. Patrik, H.T. (1966): Financial Development and Economic Growth in Underdeveloped Coutries, in: Econimic Development and Cultural Change, Vol. 14, P. 174-189

10. Pilgrim, M. (2002): Sparkapitalbildung in Entwicklungslander, Berlin: Duncker & Humblot

11. Pischke, J. von / Hefferman, P. / Adams, D. (1991): The Political Economy of Specialized Farm Credit Institutions in Low-Income Countries, Weltbank (Hrsg.), Saff Working Papier Nr. 446, Washington D. C.

12. Pischke, J. von (1991): Finance at the Frontier: The Role of Credit in Development of the Privat Economy, Washington D. C.

13. Schrumpeter, J. (1911): Theorie der wirtschaftlichen Entwicklung: Eine Untersuchung uber Unternehmergewinn, Kapital, Kredit, Zins und Konjunkturzyklus, 7. Aufl., Berlin 1987

14. Smith, A. (1879): Natur und Ursachen des Volkswohlstandes, dt. v. Wilhelm Loewenthal, Berlin: Verlag vin Elwin Staude

15. Sombart, W. (1927): Der moderne Kapitalismus, Bd. I: Der Vorkapitalistische Wirtschaft, 2. Aufl., Munchen: Drьcker & Humblot

16. Weltbank (1994): Weltentwicklungsbericht, Washigton, D. C.: Weltbank