Influence of financial policy on economic growth

Sapozhnikov German Nikiforovich

The low growth rates of the Russian economy and the cessation of the increase in the incomes of the population make us look for ways to improve this situation, including drawing on the past Soviet experience and modern Western countries. For this purpose the analysis of dynamic development of economy of our country at an acute shortage of financial resources during industrialization of the USSR is carried out, and also the reasons of steady development of economy of the Western countries at the deficit budget in comparison with less successful modern Russian economy, despite its surplus budget are studied. The results of this analysis lead to the conclusion that the financial sector enjoys priority in the Russian economy, thanks to which, a very modest increase in GDP is entirely transferred to the income of banks, which, in fact, do not help the growth of production - the available significant financial reserves due to high credit rates are not profitable for borrowers when lending, both to production and to the population. For the growth of the economy, including the income of the population, the purpose of financial policy should be to support production, not banks. As a minimum requirement – lending and production and population must be made no less affordable than in developed Western countries and in China. The activities of the banking sector should be in the interests of the state and citizens, not international institutions such as the WTO, IMF and others. To do this, appropriate rules must be developed, which must be strictly controlled. Ultimately, the intensification of production will lead not only to economic growth and incomes but also to higher Bank profits, through increased lending and not by increasing lending rates.

Keywords:Industrialization, the shortage of funds, dual currency system, financial policy, income banks, lending production, availability of credit, GDP growth, banking, income of the population