Economics
Finance Companies
Finance companies are non-bank financial institutions that provide a range of lending and financial services, such as personal loans, auto financing, and small business loans. They raise funds through deposits, commercial paper, and other debt instruments, and then lend these funds to consumers and businesses at a profit. Finance companies play a crucial role in providing credit to individuals and small businesses.
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3 Key excerpts on "Finance Companies"
eBook - ePub- Nicholas Deakin(Author)
- 2021(Publication Date)
- Routledge(Publisher)
FINANCE AND BANKING DOI: 10.4324/9781003101581-18T HE age in which we live has been called the age of Finance Capitalism. As the scale of industry grows larger and the complications of the market increase, the banker and financier assume an increasing importance in the conduct of economic affairs. Capital for large-scale enterprises cannot be raised from the investing public without the help of wealthy financial institutions which sponsor or underwrite the issues of industrial shares. Such specialised institutions as insurance companies are in control of large masses of capital which is available for investment: the small investors make increasing use of investment trusts of various types, and of other intermediate agencies for the placing of their money; and over an ever-increasing part of the field one form or another of collective investment through large-scale capitalist agencies is replacing the personal investment of individual savings in production enterprise.Moreover, every industrialist and every trader who G* does business on any substantial scale, including the ordinary shopkeeper and the farmer, depends continually on credit for the ability to carry on his undertakings. Overseas trade is financed mainly by bills of exchange or similar instruments; and there exist in the City of London important specialised agencies for the discounting and acceptance of these bills—a business which is also carried on extensively by joint stock banks. For purposes of internal trade and production, business firms normally depend on bank loans and advances of short-term credit, of which the joint stock banks are the suppliers, through their chains of branches extending over the whole country. If the financial machine were to stop, as it threatened to stop in the United States at the beginning of President Roosevelt’s term of office, the productive machine would largely stop too—until there had been time to make alternative arrangements for the financing both of current purchases and of production for the future.
eBook - ePubBanking and Finance in Japan (RLE Banking & Finance)
An Introduction to the Tokyo Market
- Kazuo Tatewaki(Author)
- 2012(Publication Date)
- Routledge(Publisher)
shinpan kaisha) have expanded rapidly in both sales credit and consumer loans, while credit card companies tied to banks and consumer credit companies have also seen fast growth in the consumer credit area. These trends indicate that the needs of consumers have shifted away from money for the purchase of durable goods, such as electric appliances and automobiles, toward education, leisure, and entertainment. It is also observed that demand has been increasing for free loans or cash loans without collaterals which may be used for any purpose.With this growth in the consumer credit industries, some social problems have emerged concerning the unusually high rate of interest and improper collection procedures applied by cash loan companies. In coping with these problems, two laws concerning the money-lending industry were implemented in May 1983. It was thought necessary to improve and expand further consumer protection through reform in the law and the system of obtaining consumer credit information.Securities Finance Companies
Securities Finance Companies are specializing in the financing of securities in order to supply the funds necessary for the smooth issuance and circulation of stocks and bonds. The origin of securities Finance Companies dates back to post-war days. When the stock exchanges were reopened in 1949, large blocks of stock were dumped on the market because of the dissolution of the major industrial giants (zaibatsu). As a result, there was a serious depression in the stock market.In order to overcome this depression and in an effort to ensure the sound development of the market, a margin trading system was introduced. Nine securities Finance Companies were established in 19S0 for the purpose of supplying the equities and funds necessary for trading to the securities companies. In 1955, these Finance Companies merged into three companies in order to strengthen their services. They are located in Tokyo, Osaka and Nagoya.The basic operation of the securities Finance Companies is lending to securities firms in the form of loans for margin transactions. These loans are used to supply funds necessary for margin trading in equities between the securities firms and their customers. However, loans collateralized by bonds or bond dealer financing was begun in 1960 in order to promote development of the bond market In addition, the securities Finance Companies make working capital loans to the securities companies and also lend to general investors on the collateral of securities.
eBook - ePub- Todd Knoop(Author)
- 2013(Publication Date)
- Routledge(Publisher)
John Maynard Keynes (1936) compared stock markets to a beauty contest in which the best strategy for picking the winner is not to use your own opinion of who is most beautiful, but to predict which contestant the other judges will think is most beautiful. Such subjectivity means that fundamental attributes of stocks may play a relatively minor role in price movements over short periods, leading to extreme price volatility and risk.Financial intermediaries. Financial intermediaries are organizations that facilitate the transfer of money from small savers to borrowers. Financial intermediaries take many forms. Insurance companies collect premiums from contract holders and use these premiums to purchase large asset portfolios, making payouts to contract holders when specific events occur. Mutual funds issue shares and use the proceeds to purchase large portfolios of assets, changes in the value of which are reflected in the price of the mutual fund's shares. Finance Companies are often tied to consumer product corporations and provide financing to the purchasers of these products by raising funds, primarily through bond issues. Finally, banks (depository institutions) primarily raise funds by issuing deposit accounts and certificates of deposit, and primarily use these funds to make commercial and consumer loans and to purchase bonds.Commercial banks (banks that emphasize lending to firms and households) are the most important financial intermediaries, and the most important source of finance in general, in emerging market economies. They provide a wide array of borrowing and lending services that are crucial to well-functioning financial systems. They also specialize in providing these services to households and small firms that are the most dependent on finance and that also constitute a large segment of emerging market economies.
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