FINANCE, ACCOUNTING AND BANKING PAPER
Money is the important part of market relations, because it is a maximum liquidity product that is a tool for the exchange of goods or services and is a universal equivalent of the cost of other goods and services. Despite financial market relations, money is the important part of the social life, because it composes the social status of a citizen.
The cycle of money is a basic thing is the market relations. The cycle of the money is a key characteristic that determines the effectiveness of market relations. According to Simpson (2014) the cycle of money is a money movement between the lender and borrower in both directions with the help of different financial organization. The cycle of money starts with the money request from borrower to lender. Usually, banks are the assisting financial organization during this process, so they strictly regulate their relations, using different rates and rules and clarify the duration and the loan interest. Later, after the expiration of the loan term, the borrower returns the money to lender with all additional loan interests and other fees. Usually all participants of money cycle get some benefits from their cooperation, for example, the lender increases his wealth by regular loans and additional interest rates payment, the borrower receives the missing money and develops his business or multiplies the money in other legal ways, finally the financial organization receives regular income by regulating lender\borrower relations and proving other financial services for all participant of money cycle.
The common objective of money cycle is very simple and genius at the same time. Using the money cycle all participants multiplies their resources and finances. In ideal market conditions, the money cycle provides regular wealth growing and economic progress for entire financial sector and all country in general.
Simpson, B. (2014). Money, banking, and the business cycle. …