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Financial capital (also simply known as capital or equity in
finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corn ...

finance
,
accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compare with other ob ...
and
economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interact ...

economics
) is any economic resource measured in terms of
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The main functions of money are distinguished as: a ...

money
used by
entrepreneur Entrepreneurship is the creation or extraction of value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values than simply ...

entrepreneur
s and
business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trad ...

business
es to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, ''e.g.'', retail, corporate,
investment banking An investment bank is a financial services Financial services are the economic services provided by the finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is conce ...
, etc. In other words, financial capital is internal
retained earnings The retained earnings (also known as plowback) of a corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by priva ...
generated by the entity or funds provided by
lenders A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of people who have been invited by a host A host is ...

lenders
(and
investors An investor is a person that allocates capital with the expectation of a future financial return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Type ...
) to businesses in order to purchase
real capital In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goo ...
equipment or services for producing new goods and/or services. In contrast,
real capital In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goo ...
(or economic capital) comprises physical goods that assist in the production of other goods and services, e.g. shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories.


IFRS concepts of capital maintenance

''Financial capital'' generally refers to saved-up financial
wealth Wealth is the abundance of valuable financial asset A financial asset is a non-physical asset whose value is derived from a contractual claim, such as deposit (finance), bank deposits, bond (finance), bonds, and participations in companies' sh ...
, especially that used in order to start or maintain a business. A financial concept of capital is adopted by most entities in preparing their
financial reports Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to und ...
. Under a financial concept of capital, such as ''invested money'' or ''invested purchasing power'', capital is synonymous with the
net assets Net worth is the value of all the non-financial and financial asset In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and no ...
or
equity Equity may refer to: Finance, accounting and ownership *Equity (finance), ownership of assets that have liabilities attached to them ** Stock, equity based on original contributions of cash or other value to a business ** Home equity, the differe ...
of the entity. Under a physical concept of capital, such as operating capability, capital is regarded as the
productive capacityProductive capacity is the maximum possible output Output may refer to: * The information produced by a computer, see Input/output In computing, input/output (I/O, or informally io or IO) is the communication between an information processing syst ...
of the entity based on, for example, units of output per day. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. Constant item purchasing power accounting#CIPPA as per the IASB's Framework.5B14.5D .5B15.5D Constant item purchasing power accounting Accordingly, there are three concepts of capital maintenance in terms of
International Financial Reporting Standards International Financial Reporting Standards, commonly called IFRS, are accounting standard Publicly traded companies typically are subject to the most rigorous standards. Small and midsized businesses often follow more simplified standards, plus ...
(IFRS): # Physical capital maintenance; # Financial capital maintenance in nominal monetary units; and # Financial capital maintenance in units of constant purchasing power. Financial capital is provided by lenders for a price:
interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money availa ...

interest
. Also see
time value of money The time value of money is the widely accepted conjecture that there is greater benefit to receiving a sum of money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, ...
for a more detailed description of how financial capital may be analyzed. Furthermore, financial capital, is any liquid medium or mechanism that represents
wealth Wealth is the abundance of valuable financial asset A financial asset is a non-physical asset whose value is derived from a contractual claim, such as deposit (finance), bank deposits, bond (finance), bonds, and participations in companies' sh ...

wealth
, or other styles of
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
. It is, however, usually purchasing power in the form of money available for the production or purchasing of goods, etcetera. Capital can also be obtained by producing more than what is immediately required and saving the surplus. Financial capital can also be in the form of purchasable items such as computers or books that can contribute directly or indirectly to obtaining various other types of capital. Financial capital has been subcategorized by some academics as
economic An economy (; ) is an area of the production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products ...
or "
productive capital In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
" necessary for operations,
signaling In signal processing Signal processing is an electrical engineering subfield that focuses on analysing, modifying, and synthesizing signals such as audio signal processing, sound, image processing, images, and scientific measurements. Sig ...
capital which signals a company's financial strength to shareholders, and regulatory capital which fulfills
capital requirement A capital requirement (also known as regulatory capital or capital adequacy) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital adequacy ratio o ...
s.


Sources of capital

* Long term – usually above 7 years **
Share Capital __NOTOC__ A corporation's share capitalGlossary on Trade Financing Terms - S
in the U ...
**
Mortgage loan A mortgage loan or simply mortgage () is a loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money ...
**
Retained Profit The retained earnings (also known as plowback) of a corporation is the accumulated net income of the corporation that is retained by the corporation at a particular point of time, such as at the end of the reporting period. At the end of that perio ...
**
Venture capital Venture capital (VC) is a form of private equity Private equity (PE) typically refers to investment funds, generally organized as limited partnerships, that buy and restructure companies that are not publicly traded. Private equity is a ty ...
**
Debenture In corporate finance Corporate finance is the area of finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and ...
** Project finance * Medium term – usually between 2 and 7 years ** Term Loans **
Revenue-based financingRevenue-based financing or royalty-based financing (RBF) is a type of financial capital provided to small or growing businesses in which investors inject capital into a business in return for a fixed percentage of ongoing gross revenues, with payme ...
**
Leasing A lease is a contract A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it meets the requirements and ...
**
Hire Purchase A hire purchase (HP), also known as an installment plan or the never-never, is an arrangement whereby a customer agrees to a contract to acquire an asset by paying an initial installment (e.g., 40% of the total) and repays the balance of the price ...

Hire Purchase
* Short term – usually under 2 years ** Bank Overdraft **
Trade credit Trade credit is the loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to ...
** Deferred Expenses ** Factoring


Capital market

* Long-term funds are bought and sold: ** Shares **
Debenture In corporate finance Corporate finance is the area of finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and ...
** Long-term loans, often with a mortgage bond as security ** Reserve funds ** Euro Bonds


Money market

* Financial institutions can use short-term savings to lend out in the form of short-term loans: **
Commercial paper Commercial paper, in the global financial market, is an Unsecured debt, unsecured promissory note with a fixed Maturity (finance), maturity of rarely more than 270 days. In layperson terms, it is like an "wikt:IOU, IOU" but can be bought and so ...
** Credit on open account ** Bank overdraft ** Short-term loans **
Bills of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a c ...
** Factoring of debtors


Differences between shares and debentures

*
Shareholders A shareholder (in the United States often referred to as stockholder) of a corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal en ...
are effectively owners; debenture-holders are creditors. * Shareholders may vote at AGMs ( Annual General Meetings, alternatively Annual Shareholder Meetings) and be elected as directors; debenture-holders may not vote at AGMs or be elected as directors. * Shareholders receive profit in the form of dividends; debenture-holders receive a fixed rate of interest. * If there is no profit, the shareholder does not receive a dividend; interest is paid to debenture-holders regardless of whether or not a profit has been made. *In case of
dissolution Dissolution may refer to: Arts and entertainment Books * Dissolution (Forgotten Realms novel), ''Dissolution'' (''Forgotten Realms'' novel), a 2002 fantasy novel by Richard Lee Byers * Dissolution (Sansom novel), ''Dissolution'' (Sansom novel), a 2 ...
the firm's debenture holders are paid first, before shareholders.


Types of capital


Fixed capital

Fixed capital is money firms use to purchase assets that will remain permanently in the business and help it make a profit. Factors determining fixed capital requirements: * Nature of business * Size of business * Stage of development * Capital invested by the owners * location of that area


Working capital

Firms use working capital to run their business. For example, money that they use to buy stock, pay expenses and finance credit. Factors determining working capital requirements: * Size of business * Stage of development * Time of production * Rate of stock turnover ratio * Buying and selling terms * Seasonal consumption * Seasonal product *profit level *growth and expansion *production cycle *general nature of business *business cycle *business policies *Debt ratio


Own and borrowed capital

Capital contributed by the owner or entrepreneur of a business, and obtained, for example, by means of savings or inheritance, is known as own capital or
equity Equity may refer to: Finance, accounting and ownership *Equity (finance), ownership of assets that have liabilities attached to them ** Stock, equity based on original contributions of cash or other value to a business ** Home equity, the differe ...
, whereas that which is granted by another person or institution is called borrowed capital, and this must usually be paid back with interest. The ratio between debt and equity is named
leverage Leverage or leveraged may refer to: *Leverage (mechanics), mechanical advantage achieved by using a lever *Leverage (album), ''Leverage'' (album), a 2012 album by Lyriel *Leverage (dance), a type of dance connection *Leverage (finance), using giv ...
. It has to be optimized as a high leverage can bring a higher profit but create
solvency Solvency, in finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money ...
risk. Borrowed capital is capital that the business borrows from institutions or people, and includes debentures: * Redeemable debentures * Irredeemable debentures * Debentures to bearer * Ordinary
debenture In corporate finance Corporate finance is the area of finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and ...
s * bonds * deposits *loans Own capital is capital that owners of a business (shareholders and partners, for example) provide: * Preference shares/hybrid source of finance ** Ordinary preference shares ** Cumulative preference shares ** Participating preference shares * Ordinary shares * Bonus shares * Founders' shares These have preference over the equity shares. This means the payments made to the shareholders are first paid to the preference shareholder(s) and then to the equity shareholders.


Instruments

A
contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview ...

contract
regarding any combination of
capital asset A capital asset is defined to include property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession. It includes all kinds of property, movable or immovable, tangible ...
s is called a
financial instrument Financial instruments are monetary contracts A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it me ...
, and may serve as a *
medium of exchange In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behavio ...
, *
standard of deferred payment In economics, standard of deferred payment is a function of money. It is the function of being a widely accepted way to value a debt, thereby allowing goods and services to be acquired now and paid for in the future.http://www.amosweb.com/cgi-bin/ ...
, *
unit of account In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
, or *
store of value A store of value is the function of an asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce pos ...
. Most indigenous forms of money (wampum, shells, tally sticks and such) and the modern
fiat money Fiat money (from la, fiat, ) is a type of money that is not backed by any commodity such as gold or silver, and typically declared by a decree from the government to be legal tender. Throughout history, fiat money was sometimes issued by local ...
are only a "symbolic" storage of value and not a real storage of value like commodity money.


Valuation

Normally, a financial instrument is priced accordingly to the perception by capital market players of its expected return and risk. Unit of account functions may come into question if valuations of complex financial instruments vary drastically based on timing. The "
book value In accounting, book value is the value of an asset according to its balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances ...
", "
mark-to-market Mark-to-market (MTM or M2M) or fair value accounting refers to accounting for the "fair value In accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about econo ...
" and " mark-to-future" conventions are three different approaches to reconciling financial capital value units of account.


Issuing and trading

Like money, financial instruments may be "backed" by state military fiat,
credit px, Domestic credit to private sector in 2005 Credit (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, k ...
(i.e.
social capital Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social group In the social science Soc ...
held by banks and their depositors), or
commodity In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plan ...
resources. Governments generally closely control the supply of it and usually require some "reserve" be held by institutions granting credit. Trading between various national
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Money is any item or verifiable record that is generally accepted as payment for goods and services ...

currency
instruments is conducted on a
money market The money market is a component of the economy which provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity In economics Economic ...
. Such trading reveals differences in probability of
debt collection Debt collection is the process of pursuing payments of debts owed by individuals or businesses. An organization that specializes in debt collection is known as a collection agency or debt collector. Most collection agencies operate as agents of c ...
or
store of value A store of value is the function of an asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce pos ...
function of that currency, as assigned by traders. When in forms other than money, financial capital may be traded on
bond market The bond market (also debt market or credit market) is a financial market A financial market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an i ...
s or reinsurance markets with varying degrees of trust in the
social capital Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social group In the social science Soc ...
(not just credits) of bond-issuers, insurers, and others who issue and trade in financial instruments. When payment is deferred on any such instrument, typically an interest rate is higher than the standard interest rates paid by banks, or charged by the central bank on its money. Often such instruments are called fixed-income instruments if they have reliable payment schedules associated with the uniform rate of interest. A variable-rate instrument, such as many consumer mortgages, will reflect the standard rate for deferred payment set by the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money ...

central bank
prime rate A prime rate or prime lending rate is an interest rate An interest rate is the amount of interest Interest, in finance and economics, is payment from a debtor, borrower or deposit-taking financial institution to a lender or depositor of an amou ...
, increasing it by some fixed percentage. Other instruments, such as citizen entitlements, e.g. " U.S. Social Security", or other pensions, may be indexed to the rate of inflation, to provide a reliable value stream. Trading in
stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in whic ...

stock market
s or
commodity market A commodity market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films ...
s is actually trade in underlying assets which are not wholly financial in themselves, although they often move up and down in value in direct response to the trading in more purely financial
derivatives Derivative may refer to: In mathematics and economics *Brzozowski derivative in the theory of formal languages *Derivative in calculus, a quantity indicating how a function changes when the values of its inputs change. *Formal derivative, an opera ...
. Typically commodity markets depend on politics that affect international trade, e.g. boycotts and embargoes, or factors that influence
natural capital on "natural capital" and "balancing the budget of our resources" File:Fires along the Rio Xingu, Brazil - NASA Earth Observatory.jpg, Fires along the Rio Xingu, Brazil - NASA Earth Observatory. Loss of natural capital assets may have significant ...
, e.g. weather that affects food crops. Meanwhile, stock markets are more influenced by trust in corporate leaders, i.e.
individual capital Individual capital, the economic view of talent, comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will Free will is the ability to choose between different possible courses of ...
, by consumers, i.e.
social capital Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social group In the social science Soc ...
or "brand capital" (in some analyses), and internal organizational efficiency, i.e.
instructional capital Instructional capital is a term used in educational administration after the 1960s, to reflect capital resulting from investment in producing learning materials. Education finance Capital (economics) {{education-stub ...
and
infrastructural capital Public capital is the aggregate body of government-owned assets that are used as a means for productivity.Aschauer, D. A. (1990). Why is infrastructure important? Conference Series roceedings Federal Reserve Bank of Boston. Pp. 21-68. Such assets ...
. Some enterprises issue instruments to specifically track one limited division or brand. " Financial futures", "
Short selling In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avail ...

Short selling
" and " financial options" apply to these markets, and are typically pure financial bets on outcomes, rather than being a direct representation of any underlying asset.


Broadening the notion

The relationship between financial capital,
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The main functions of money are distinguished as: a ...

money
, and all other styles of
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
, especially
human capital Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge Knowledge is a familiarity or awareness, of someone or someth ...

human capital
or
labor Labour or labor may refer to: * , the delivery of a baby * , or work ** , physical work ** , a socioeconomic relationship between a worker and an employer Literature * , an American quarterly on the history of the labor movement * ', an academic ...
, is assumed in
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money ...

central bank
policy and regulations regarding instruments as above. Such relationships and policies are characterized by a
political economy Political economy is the study of production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products ( ...
feudalist,
socialist Socialism is a political Politics (from , ) is the set of activities that are associated with making decisions In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the Cognition, cognitive pr ...

socialist
,
capitalist Capitalism is an economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, ...

capitalist
,
green Green is the color between blue and yellow on the visible spectrum. It is evoked by light which has a dominant wavelength of roughly 495570 Nanometre, nm. In subtractive color systems, used in painting and color printing, it is created by ...
,
anarchist Anarchism is a political philosophy and Political movement, movement that is sceptical of authority and rejects all involuntary, coercive forms of hierarchy. Anarchism calls for the abolition of the State (polity), state, which it holds to ...

anarchist
or otherwise. In effect, the means of
money supply In macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics Economics () is a social science Social science is the Branches of science, branch of science dev ...
and other regulations on financial capital represent the economic sense of the value system of the society itself, as they determine the allocation of labor in that society. So, for instance, rules for increasing or reducing the money supply based on perceived
inflation In economics, inflation refers to a general progressive increase in prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a r ...
, or on
measuring well-being Quality of life (QOL), according to Britannica, is the degree to which an individual is healthy, comfortable, and able to participate in or enjoy life events. The World Health Organization The World Health Organization (WHO) is a list of sp ...
, reflect some such
values In ethics Ethics or moral philosophy is a branch of philosophy Philosophy (from , ) is the study of general and fundamental questions, such as those about Metaphysics, existence, reason, Epistemology, knowledge, Ethics, values, Philoso ...
, reflect the importance of using (all forms of) financial capital as a stable store of value. If this is very important, inflation control is key - any amount of money inflation reduces the value of financial capital with respect to all other types. If, however, the medium of exchange function is more critical, new money may be more freely issued regardless of impact on either inflation or well-being.


Economic role

Socialism Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, ...
,
capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
,
feudalism Feudalism, also known as the feudal system, was the combination of the legal, economic, military, and cultural customs that flourished in Medieval Europe In the history of Europe The history of Europe concerns itself with the disc ...
,
anarchism Anarchism is a political philosophy Political philosophy or political theory is the philosophical Philosophy (from , ) is the study of general and fundamental questions, such as those about reason, existence, knowledge ...

anarchism
, and other civic theories take markedly different views of the role of financial capital in social life, and propose various political restrictions to deal with that. Financial capitalism is the production of profit from the manipulation of financial capital. It is held in contrast to
industrial capitalism Capitalism is an economic system based on the private ownership Private property is a legal designation for the ownership of property Property (''latin: Res Privata'') in the Abstract and concrete, abstract is what belongs to or with ...
, where profit is made from the manufacture of goods.


Marxist perspectives

It is common in
Marxist Marxism is a method of socioeconomic Socioeconomics (also known as social economics) is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how modern society, societies soci ...
theory to refer to the role of finance capital as the determining and ruling class interest in capitalist society, particularly in the latter stages.


See also

*
Capital market A capital market is a financial market A financial market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Swed ...
*
Constant item purchasing power accounting Constant purchasing power accounting (CPPA) is an accounting model approved by the International Accounting Standards Board The International Accounting Standards Board (IASB) is the independent, accounting standard Publicly traded companies typ ...
*
Financialization Financialization (or financialisation in British English) is a term sometimes used to describe the development of financial capitalism during the period from 1980 to present, in which Financial leverage, debt-to-equity ratios increased and finan ...
*
Funding Funding is the act of providing resources A resource is a source or supply from which a benefit is produced and that has some utility. Resources can broadly be classified upon their availability — they are classified into renewable and non-re ...

Funding
*
Money supply In macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics Economics () is a social science Social science is the Branches of science, branch of science dev ...
*
List of finance topics The following outline is provided as an overview of and topical guide to finance: Finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation a ...


References


Difference between Shares and Debentures


Further reading

*F. Boldizzoni, ''Means and Ends: The Idea of Capital in the West, 1500-1970'', New York: Palgrave Macmillan, 2008, chapters 7-8 {{Authority control sv:Finansiellt kapital