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Role of credit in the economy. (Other sources of finance: (Sale of assets.…
Role of credit in the economy.
Risk:
Uncertainty about the future availability of a product.
Different sources:
Government legislation.
Government policy (tariffs, quotas, support, etc.)
Competitor(s).
Labour conditions including employment.
Currency valuation movement.
political stability.
Economic conditions.
Types of credit:
Overdrafts.
Trade credit.
Loans.
Liability:
Limited liability:
There is a clear definition between the business and the owners: if the business is sued, only the business is sued, not the owners.
Unlimited liability:
No clear definition between the business entity and the owners.
Sources of credit:
Other firms.
Banks.
Other types of finance:
Share capital.
Leasing.
Venture capital.
Other sources of finance:
Sale of assets.
Individual investors.
Retained profit.
Online collaborative funding.
Owner's capital: personal savings.