TOPIC 1.

INVESTMENT LENDING:
THE NATURE AND ROLE IN
THE EXPANDED SOCIAL
REPRODUCTION
 Outline of topic 1

1. Subject, tasks and structure of the course.

2. The concept of investment credit.
3. Objects of investment lending.
4. Participants of investment lending.
1. Subject, tasks and
structure of the
course.
 The of the discipline
Investment lending

is a mechanism of credit relations between the

subjects of investment lending market
 The of mastering
the discipline Investment lending

is gaining systematic knowledge of the

theory and practices of credit mechanism
implementation in the process of
investment activity.
 The of mastering the discipline
Investment lending:
study the basic theoretical principles of investment credit, its
advantages over other methods of financing of investment
projects;
comparison of foreign and domestic experience of organization of
investment credit relations;
research the mechanism of banking, government, mortgage,
foreign investment lending and leasing;
acquisition of skills of preparing investment proposals in
accordance with the requirements of creditors;
acquisition of skills of making management decisions about
attraction the credit resources to finance investment projects.
The learning outcomes are
formation of modern economic thinking and system of
knowledge about
theory and practice of crediting of investment projects and
the skills of independent creative thinking,
making decisions about involving credit sources for
financing investment projects of enterprises in conditions of
uncertainty,
finding reliable lenders and choosing attractive credit
programs.
 The structure of the discipline:
Topic 1. Investment Lending: the nature and role in the expanded
social reproduction
Topic 2 Bank Investment Lending
Topic 3. Investment loans secured by real estate
Topic 4. Leasing
Topic 5. Government Investment Lending
Topic 6. International Investment Loan
Topic 7. Risk Management in Investment Lending
 Academic hours:
Assessment
Thematic area Including:
Hours/ credits forms
Lectures Seminars Self Study
Topic 1. 10 4 4 13 T, PP
8.09, 15.09 15.09, 29.09
Topic 2 10 4 4 13 T, PP, ST
22.09, 29.09 13.10, 27.10
Topic 3. 16 4 2 13 T, ST
6.10, 13.10 10.11
Topic 4. 12 4 2 13 OE, PP, ST
20.10, 27.10 24.11
Topic 5. 16 2 2 13 T, PP
3.11 1.12
Topic 6. 12 2 2 13 T, PP
10.11 8.12
Topic 7. 14 4 2 13 OE, PP, ST
17.11, 24.11 8.12
Module Control 2 2 MC
15.12
Total 135/4,5 24 20 91
End-of Course Assessment Examination
Assessment forms
T testing;
PP - Preparing a presentation / speech on round table;
ST - solution of tasks / performing practical tasks;
OE - oral enquiry;
TMC tasks for the module control

Every type of work is estimated at 5 points

2. The concept of
investment credit
Investment credit is
Socioeconomic relations between participants of the investment
process (investor and lender-borrower) on the redistribution of
funds, undertaken to finance investment activities and ensures
continuity of all stages of expanded reproduction
Mechanism of implementation of credit relationships in the
investment area.
Process of channeling credit resources to the investment needs
of the borrower, that are aimed at the expanded reproduction
of his capital, in accordance with principles of lending
 2. .

.
- ,
( -
)
,

.

,
,

( -
)
 Investment
lending

Project
Project crediting
financing
 In the early twentieth century
Joseph A. Schumpeter in his book
"The Theory of Economic
Development" (1912) emphasized
the primacy of investment credits
because they are innovative
(create capital, stimulate
development and increase
profitability)
Features of investment lending:
The main role in credit analysis plays evaluation
of the investee, not the solvency of the
borrower, as with conventional loans
Investment loan rate depends on the term of
return on investment
Investment loan term depends on the payback
period of the investment
...
 The need for investment loans:

The difference in time of movement of

material and cash flow
Differences in the amount and timing of the
return of advanced capital that invested in
production
The need to simultaneously investing of large
sums of money for the modernization of the
production process
 The role of investment loans:
They are an important source of capital
investment
create favourable conditions for the
development of all spheres and sectors of the
national economy
the need to repay the loan contributes to the
saving mode in the project development and
used in monitoring of the return on investment
 3. Objects of
investment lending.
The object of credit relations

is the value, which is provided in

the loan for profit
The object of investment credit relations is
often the objects of real investment:
investment in capital assets
and the increase of inventories.
Objects of investment lending are:
Buildings
Construction
Complexes
Phases of construction and new
construction
Expansion, reconstruction and
modernization of existing enterprise
 Types of investment lending:
the construction and land development;
the purchase of movable and immovable property (buildings, equipment,
land and others, including privatization);
financial leasing;
the purchase of intangible assets, corporate and property rights, copyright
and other intellectual property;
the purchase of technical, technological, commercial and other knowledge,
are made out in form of technical documentation required for the
organization of any type of production, but not patented (know-how); the
purchase of rights for using land, water resources, buildings, constructions,
equipment and other property rights;
renovation, expansion or modernization of existing enterprises;
the purchase assets, production and distribution of new types of equipment
and technology etc
 The object of investment lending
mostly appears in the form the
investment project
 :

():





 Investment project
measures for the design, construction,
purchase of technology and equipment,
staff training, etc., aimed at the creation of
a new or upgrading existing production of
goods (products and services) to obtain
economic benefit
Types of investment projects by:
Area (purpose):
Investments in improving production
efficiency
Investment in production expansion
Investments in new businesses
Investments to meet the requirements of
government authorities
Relation:
Independent
Mutually exclusive
Complementary
Terms:
Short-term
Medium-term
Long-term
Volume:
Small
Medium
Large
Mega-projects
Nationality:
Domestic
Foreign
Mixed
Scale:
Global
International
National
Regional
Local
Branch:
Commercial
Social
Environmental

Priority:
Urgent
Laid for a longer period of implementation
Level of risk:
Low-risk
Medium-risk
High-risk
Type of cash flow:

With a homogeneous cash flow

With a inhomogeneous cash flow
 Forms of investment projects:
Zero project - creation of new company,
production...;

Reconstruction - introduction of advanced

technologies without changing profile of the
enterprise

Expansion or rehabilitation of the company

Investment cycle

time from idea to production, which

includes the development and
implementation of the investment
project
Three phases of investment cycle
Pre-investment - preliminary study before
the final investment decision
Investment - design, contracting,
construction
Post-investment (output) - exploitation of
newly created objects
 Components of the project:
Summary (short description)
Background and basic idea of the project
Market analysis and marketing concept
Raw materials and logistics
Location, construction area, environment (social and economic conditions)
Design and technology (plan of industrial activity)
Organisation of management
Workforce
Plan the project (schedule of activities)
The financial plan and the effect of investments (+ funding strategy and risk
assessment)
Environmental plans
 THANK YOU
FOR LISTENING!

YOUR
QUESTIONS
 Homework:

To analyze:

The degree of depreciation of fixed assets by economic activity (2010-2015)%

Capital investments by type of asset (2010-2015).
Capital investments by economic activities (2010-2015)
Capital investments by source of funding (2010-2015)
The dynamics and the ratio of capital investment and GDP (2010-2015)
Sources of financing of innovative activity (2010-2015)
The number and proportion of enterprises that implemented innovations (2010-
2015)
Source: http://ukrstat.org/
Questions to the seminar
1. The essence of the investment loan.
2. Objects and subjects of investment
lending.
3. Forms of investment loans.
4. The role of investment lending in the
explored reproduction.

Preparation of individual tasks:

"Comparative characteristics of methods of
investment projects financing"
 To read:

http://forbes.ua/ua/news/1386377-eba-
investicijnij-klimat-v-ukrayini-ne-pokrashchuetsya

http://finbalance.com.ua/news/Investitsiyniy-
klimat-v-Ukrani-yak-Kabmin-planu-yoho-
polipshuvati-v-2015-2017-rr-

http://hvylya.net/analytics/society/chto-
evropeytsev-shokiruet-v-ukrainskom-biznese-i-
nauke.html

https://inventure.com.ua/news/world/strany_s_s
amoj_vysokoj_investicionnoj_privlekatelnostyu_v_
2014_godu