Entropy approach to understanding the nature of loan interest
https://doi.org/10.34020/1993-4386-2025-2-87-103
Abstract
The article examines the existing theories of loan interest, their advantages and disadvantages. The general features and differences in the existing theories of interest are revealed. The author's classification of theories of loan interest is given. The applicability of the entropy approach to substantiating the essence of interest is substantiated. The objective entropy essence of loan interest as an instrument for regulating entropy in the economy is revealed. An explanation of the functions of loan interest from the point of view of the entropy approach is given. The phenomena of loan interest in the economy are considered and explained from the point of view of the entropy approach. The existing theories of loan interest are considered as special cases of the entropy approach to its understanding. The admissibility of loan interest as an effective instrument for achieving competitiveness within the framework of economic evolution is substantiated. Recommendations are given for regulating loan interest taking into account its entropy essence.
About the Author
V. F. Islamutdinov
Kazan (Volga Region) Federal University (KFU), Yelabuga Institute (branch) of KFU (Republic of Tatarstan, Russia); Urgench State University (Republic of Uzbekistan)
Russian Federation
Russian Federation
Vadim F. Islamutdinov – Doctor of Economics, Associate Professor, Professor of the Yelabuga Institute; Acting Professor of the Department of Economics,
Yelabuga;
Urgench (Uzbekistan).
References
1. Borisov A. B. Bol'shoi ekonomicheskii slovar' [The Large Economic Dictionary], Moscow, Knizhny Mir, 2006, 543 p. (In Russ.).
2. Bekkin R. Interest in the Context of Religious and Ethical Economic Systems of the Past and Presen. Voprosy ekonomiki, 2007, No. 2, pp. 141-157. (In Russ.).
3. Blaug M. Ekonomicheskaya mysl' v retrospektive [Economic Thought in Retrospect]. Transl. from English, 4th ed., Moscow, Delo Ltd, 1994, 720 p. (In Russ.).
4. Marx K. Kapital. Kritika politicheskoj ekonomii. T. 2. Kn. II: Process obrashcheniya kapitala [Capital. Critique of Political Economy. Vol. 2. Book II: The process of capital circulation], Moscow, Gosudarstvennoe izdatel'stvo politicheskoj literatury, 1951, 532 p. (In Russ.).
5. Böhm-Bawerk O. von. Kapital i pribyl'; T. 2: Pozitivnaya teoriya kapitala; T. 3: Ekskursy [Capital and Profit; Vol. 2: Positive Theory of Capital; Vol. 3: Excursions], trans. from English, Chelyabinsk, Socium, 2010, 916 p. (In Russ.).
6. Fisher I. The Theory of Interest as Determinated by Impatience to Spend Income and Opportunity to Invest It, New York, The MacMillan Company, 1930, 566 p.
7. Neyman A. M. D. Fisher and his role in the development of economic theory and economic analysis, Ekonomicheskii analiz: teoriya i praktika, 2003, No. 2, pp. 2–8. (In Russ.).
8. Mises L. von. The Theory of Money and Credit / Translated from the German by J.E. Batson, USA: Yale University Press, 1953, 493 p.
9. Keynes J. M. Obshchaya teoriya zanyatosti, procenta i deneg [The General Theory of Employment, Interest and Money], trans. from English, Moscow, ZAO «Bizneskom», 2013, 408 p. (In Russ.).
10. Shigaeva N. V. Theory of loan interest throughout the history of its emergence and development, Istoriya i arkheologiya. 2014, No. 6. Available at: https://history.snauka.ru/2014/06/1080 (date of access: 01/16/2025). (In Russ.).
11. Demchuk I. N., Fadeikina N. V. The Untold Lessons of John Maynard Keynes' Economic Doctrine, Sibirskaya finansovaya shkola, 2016. No. 1 (114), рр. 34–41. (In Russ.).
12. Samarukha I. V. What phenomenon is loan interest: monetary or real? Izvestiya Baikal'skogo gosudarstvennogo universiteta, 2004, No. 4 (41), pp. 29–33. (In Russ.).
13. Friedmеn M. Kolichestvennaya teoriya deneg [Quantitative theory of money], 1996, Moscow, El'f-press, 131 p. (In Russ.).
14. Fetter F. A. Interest Theories, Old and New, The American Economic Review, 1914, Vol. 4, No. 1, pp. 68–92.
15. Mankiw N. G. Real Business Cycles: A New Keynesian Perspective, Journal of Economic Perspectives, 1989, Vol. 3. No. 3. pp. 79–90.
16. Binbin D. Real Business Cycle Theory–A Systematic, MPRA Paper. 2010, No. 17932, Available at: https://mpra.ub.uni–muenchen.de/17932/ (date of access: 02/26/2025).
17. Artamonova L.N. Post-Keynesianism as an evolution of the Keynesian model of 20th century macroeconomics, Vestnik MGIMO–Universiteta, 2016, No. 6(51), pp. 106–114. (In Russ.). DOI: https://doi.org/10.24833/2071–8160–2016–6–51–106–114
18. Anshul K. A basic two–sector new Keynesian DSGE model of the Indian economy, MPRA Paper, 2023, No. 115863. Available at: https://mpra.ub.uni–muenchen.de/115863/ (date of access: 02/26/2025).
19. Kolasa M., Rubaszek M. and Skrzypczyński P. Putting The New Keynesian DSGE Model To The Real– Time Forecasting Test, Working Paper Series, 2009. Nо. 1110. Available at: http://ssrn.com/abstract_id=1499084.by (date of access: 02/26/2025).
20. Christiano L. J., Eichenbaum M. S., Trabandt M. On DSGE models. NBER Working Paper, 2018, No. 24811. Available at: http://www.nber.org/papers/w24811 (date of access: 02/26/2025).
21. Hines J. H. jr. A Behavioral Theory of Interest Rate Formation. Alfred P. Sloan School of Management, Working Paper, 1986, No. 1771. Available at: https://dspace.mit.edu/bitstream/handle/1721.1/46940/behavioraltheory00hine.pdf.
22. Byrne A., Brooks M. Behavioral Finance: Theories and Evidence. The Research Foundation of CFA Institute Literature Review, 2008, pp. 1–26. Available at: https://www.cannonfinancial.com/uploads/main/Behavioral_Finance-Theories_Evidence.pdf.
23. Bekkin R. I. Islamskie finansovye instituty i instrumenty v musul'manskikh i nemusul'manskikh stranakh: osobennosti i perspektivy razvitiya [Islamic financial institutions and instruments in Muslim and non-Muslim countries: features and development prospects], Doctor Sci. (Econ.) Abstract of Thesis, Moskow: Tsentr global'nykh i strategicheskikh issledovanii Instituta Afriki RAN, 2009, 48 p. (In Russ.).
24. Ragimov R. A. The attitude of Islam to loan interest in modern conditions, Innovatsii i investitsii, 2017, No. 9. pp. 52–55. (In Russ.).
25. Carver T. N. A Synthetic Theory of Interest, The Quarterly Journal of Economics, 1954, Vol. 68, No. 4, pp. 649–651. DOI: 10.2307/1881883
26. Islamutdinov V. F., Kurikov V. M. On the application of the entropy approach in economic research on the management of economic systems, Sibirskaya finansovaya shkola, 2022, No. 2 (146), pp. 168-178. (in Russ.).
27. Islamutdinov V. F. Prerequisites for the formation of a complex theory of value based on the entropy approach, Sibirskaya finansovaya shkola, 2023, No. 3 (151), pp. 104-117. (In Russ.).
28. Boos V. O. Using the concept of entropy to describe the influence of intellectual capital on the financial results of an enterprise, Vestnik YuUrGU, 2011, No. 28, pp. 12–16.
29. Sheraz M., Preda V. Entropy Measures in Finance and Risk Neutral Densities, 2nd International Conference of Entropy and Its Applications, 2015, pp. 1-13. Available at: https://sciforum.net/manuscripts/3255/manuscript.pdf.
30. Zhou R., Cai R., Tong G. Applications of Entropy in Finance: A Review, Entropy, 2013, No. 15, pp. 4909-4931, DOI: 10.1088/14697688/2/1/306
31. Brody D. C., Hughston L. P. Entropy and information in the interest rate term structure, Quantitative Finance, 2002, Vol. 2, pp. 70–80. DOI: 10.1088/1469-7688/2/1/306
32. Camargo F. J. Sistema monetario sustentable. Aporte Entrópico desde la Economía Ecológica (Thesis de Doctorado en Ciencias Económicas). Buenos Aires: Universidad Nacional de La Matanza, 2020. 217 p. Available at: https://repositoriocyt.unlam.edu.ar/bitstream/123456789/1908/1/DCE-E-Camargo.pdf (date of access: 11/25/2023). (In Spanish).
33. Kutval Y. Islamic Economics and the Environment: A Study on Entropy, International Journal of Economics, Politics, Humanities & Social Sciences, 2024, Vol. 7, Iss. 3, pp. 227-237, DOI: 10.59445/ijephss.1495746
34. Islamutdinov V.F. Negentropic approach to substantiating the essence of money, Sibirskaya finansovaya shkola, 2024, No. 2 (154), pp. 5–19. (in Russ.).
35. Rybaltovskaya E. S. Functions of bank interest in a transition economy. Ekonomika glazami molodykh [Economics through the eyes of the young], Materials of the IV International economy. Forum of Young Scientists (Vileika, June 03-05, 2011), Minsk: Belorusskii gosudarstvennyi agrarnyi tekhnicheskii universitet, 2011, pp. 304-306. (in Russ.).
36. Pleshkun A. Interest rate in the context of inflation: contradictions and problems, Bankauski vesnik, 2013, No. 9, pp. 18-28. (in Russ.).
37. Tikhonov Yu. P. Evolution of the concept of discounting cash flows: from Leonardo Pisa's "Book of Abacus" to Irving Fisher's "Theory of Interest", Zhurnal ekonomicheskoi teorii, 2017, No. 1, pp. 142-154. (in Russ.).
38. Kovalev A. Negative interest rates: a failed experiment or a long-term trend? Bankauski vesnik, 2019, No. 6, pp. 14–21. (in Russ.).
39. Burlachkov V.K. Modern interest rate policy of central banks and the phenomenon of negative interest rates, Finansy i kredit, 2016, No. 47, pp. 2–14. (in Russ.).
40. Ugarte E., León J., Parra G. The Liquidity Trap, History, аnd Research Trends: A Bibliometric Analysis, Revista Latinoamericana de Economia. 2017, Vol. 48, No. 190, pp. 165-188.
41. Anzhu A. A., Pshenichnikov V. V. Phenomenon of financial pyramids: nature and design, Conference: International Conference on Trends of Technologies and Innovations in Economic and Social Studies, 2017. Vol. 38, рр. 13–19. DOI: 10.2991/ttiess-17.2017.3
42. Jafar R. M. S., Hussain S., Ahmed W., Ullah S. Micro–Finance and Its Impacts on People and Societies, Journal of Poverty, Investment and Development, 2016, Vol.27, pp. 53–57.
43. Schurtz H. An Outline of the Origins of Money, Chicago, Hau Books, 2024, 245 p.
44. Tyrsin A. N. Vektornoe entropiinoe modelirovanie mnogomernykh stokhasticheskikh sistem [Vector entropy modeling of multidimensional stochastic systems], Moscow, Nauka, 2022, 231 p. (in Russ.).
45. Bashkirov A. G. Renyi entropy as statistical entropy for complex systems, Teoreticheskaya i matematicheskaya fizika, 2006, Vol. 149, No. 2, pp. 299–317. (in Russ.). DOI: 10.4213/tmf4235
Review
For citations:
Islamutdinov V.F. Entropy approach to understanding the nature of loan interest. Siberian Financial School. 2025;(2):87-103. (In Russ.) https://doi.org/10.34020/1993-4386-2025-2-87-103
Views:
12
Email this article 