From the Marxists Internet Archive, a good, and not too long, definition of “Fictitious Capital“
[…]However, as the class of speculators, bankers, brokers, financiers, and so on, grows, as is inevitably the case wherever the mass of capital in a country reaches a sufficient scale, what happens is, for example, the bank finds that it is able to loan out far more than it has deposited in its vaults; speculators can sell products that they do not possess, “the right kind of person” is good for credit even when they have nothing, .etc., etc. Thus one and the same unit of productive capital may have to support not just the one retired industrialist who deposited his savings with the bank, but multiple claims on one and the same capital.
If the bank accepts one million from our retiree, but loans out ten millions, each of those ten millions has equal claim to that same value. This is how ficitious capital comes about.
To put it another way, the hundred workers who were able to create the original value by a year’s worth of their surplus labour time, can now find ten units of capital all, by one means or another, claiming a share of the same surplus.
The ability of the bank to make unsecured loans is dependent on “confidence”, and at times of expansion and boom, the mass of fictitious capital grows rapidly. Then, when the period of contraction arrives, and the workers can no longer feed the voracious appetites of all these capitals, the bank finds itself under pressure and calls in its loans, defaults occur, bankruptcies, closures, share prices fall, and things fall back to reality – fictitious value is wiped out.
In times of recession, even good, useful commodities cannot be sold because money and credit has become scarce, and the commodities prove to be valueless.
Fictitious capital is that proportion of capital which cannot be simultaneously converted into existing use-values. It is an invention which is absolutely necessary for the growth of real capital, it constitutes the symbol of confidence in the future. It is a necessary but costly fiction, and sooner or later it crashes to earth.[…]