Finance as an economic category: essence and functions

Finance as an economic category is an important part of the world economic system. In fact, they represent an instrument through which the redistribution of GDP is carried out, and the creation and operation of various monetary funds is controlled. Many people unite the concepts of finance and money, but such a decision is fundamentally wrong. Finance as an economic category is a narrower concept, since, unlike monetary relations, they reflect only those cash flows that go through special funds, and do not take into account the interaction of ordinary people. Thus, the essence of finance and their functions have their own characteristics in comparison with money. Let us dwell on this issue in more detail.

Finance as an economic category has several main functions:

• Distributive - with its help there is a financing of all business entities with the necessary funds. The most obvious in this case is the example of the state budget, which initially collects taxes of citizens of a certain country. After the budget is replenished from all possible sources of funding, the distribution of funds between different organizations, ministries and other economic structures begins. It is this function of finance that allows all citizens of the state to receive their share of the gross domestic product, and the state - to fulfill its duties to the public.
• Control function allows you to obtain information about the production process in general and its various components. It is this function that allows you to quickly receive information and make decisions about changing the situation.
• Fiscal - is the withdrawal of the state from citizens and enterprises
  Part of their income in order to maintain the state apparatus and carry out their functions. It is through paying taxes that the country's budget is being formed, which is then distributed to defense, education, medicine, science and culture, as well as other components of our life.
• The incentive function is a tax rate, different for different categories of citizens and enterprises. In addition, it implies the availability of benefits and penalties, which help not only to collect taxes in time, but also contribute to the development of certain sectors of the economy. As an example of this function, one can cite the state program aimed at developing small business. Many entrepreneurs now can work under the simplified system of the taxation, and also receive the state grants and grants.

It is finance as an economic category that reflects the development of society and the state, giving instant signals in case of unfavorable development of the situation. A competent approach to financial relations and constant control over them will help the government avoid unforeseen situations and economic crises.

As you can see, the role of finance in the economy is enormous.