Capital exports in 2006

Capital imports in 2006

Financial capital is money used by entrepreneurs and businesses to buy what they need to make their products or provide their services. For the computer game by Peter Molyneux, see The Entrepreneur. ... In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers or corporate entities such as governments, charities or other businesses. ...

Financial capital vs. real capital

Financial capital refers to the funds provided by lenders (and investors) to businesses to purchase real capital like equipment for producing goods/services. Real capital may include shovels for gravediggers, sewing machines for tailors, or machinery for manufacturing firms. Financial capital is provided by lenders for a price: interest. Also see time value of money for a more detailed description of how financial capital may be analyzed. For other senses of this word, see interest (disambiguation). ... The time value of money is the premise that an investor prefers to receive a payment of a fixed amount of money today, rather than an equal amount in the future, all else being equal. ...

Furthermore, financial capital, or economic capital, is any liquid medium or mechanism that represents wealth, or other styles of capital. 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. For the business meaning, see Wealth (economics). ... Capital has a number of related meanings in economics, finance and accounting. ...

Instruments

A contract regarding any combination of capital assets is called a financial instrument, and may serve as a A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... In accounting, a capital asset is an asset that is recorded as capital - that is, property that creates more property, e. ... Financial instruments package financial capital in readily tradeable forms - they do not exist outside the context of the financial markets. ...

• medium of exchange,
• standard of deferred payment,
• unit of account, or
• store of value

Most indigeneous forms of money (wampum, shells, tally sticks and such) and the modern fiat money is only a "symbolic" storage of value and not a real storage of value like commodity money. A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system. ... A standard of deferred payment is the accepted way (in a given market) to settle a debt. ... A unit of account is a standard numerical unit of measurement for the market value of goods, services, and other transactions. ... To act as a store of value, a commodity, a form of money or financial capital must be able to be reliably saved, stored, and retrieved - and be predictably useful when it is so retrieved. ...

Capital vs. money

Liquidity requirements of these vary significantly — leading to a diversity of contracts and financial markets to trade them on. When all four functions are served by one instrument, this is called money, which does not need to be traded on financial markets since the risk of loss of value of money is uniform across the whole society. Where no one form of money is agreed to have reliable value, and barter is undesirable, less liquid or more diverse instruments have served the four functions. This article focuses mostly on financial instruments which are not uniformly affected by native currency inflation and which are not guaranteed by a state. A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... In finance, financial markets facilitate: The raising of capital (in the capital markets); The transfer of risk (in the derivatives markets); and International trade (in the currency markets). ... For other uses, see Money (disambiguation). ... Barter is a type of trade that do not use any medium of exchange, in which goods or services are exchanged for other goods and/or services. ...

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, whereas that which is granted by another person or institution is called borrowed capital, and this must usually be paid back with interest.

Issuing and trading

Like money, financial instruments may be "backed" by state military fiat, credit (i.e. social capital held by banks and their depositors), or commodity 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 instruments is conducted on a money market. Such trading reveals differences in probability of debt collection or store of value function of that currency, as assigned by traders. Military fiat is a process whereby a decision is made and enforced by military means without the participation of other political elements. ... Credit as a financial term, used in such terms as credit card, refers to the granting of a loan and the creation of debt. ... Social capital, referring to connections within and between social networks, is a core concept in business, economics, organisational behaviour, political science, public health, and sociology. ... This article does not cite any references or sources. ... This article is about short-term financing. ... A collection agency is a business that pursues payments on debts owed by individuals or businesses. ... To act as a store of value, a commodity, a form of money or financial capital must be able to be reliably saved, stored, and retrieved - and be predictably useful when it is so retrieved. ...

When in forms other than money, financial capital may be traded on bond markets or reinsurance markets with varying degrees of trust in the social capital (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 prime rate, 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. The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ... Reinsurance is a means by which an insurance company can protect itself against the risk of losses with other insurance companies. ... Social capital, referring to connections within and between social networks, is a core concept in business, economics, organisational behaviour, political science, public health, and sociology. ... A mortgage loan is a loan secured by real property through the use of a mortgage (a legal instrument). ...

Trading in stock markets or commodity markets 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. Typically commodity markets depend on politics that affect international trade, e.g. boycotts and embargoes, or factors that influence natural capital, e.g. weather that affects food crops. Meanwhile, stock markets are more influenced by trust in corporate leaders, i.e. individual capital, by consumers, i.e. social capital or "brand capital" (in some analyses), and internal organizational efficiency, i.e. instructional capital and infrastructural capital. Some enterprises issue instruments to specifically track one limited division or brand. "Financial futures", "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. A stock exchange is an organization of which the members are stock brokers. ... Chicago Board of Trade Futures market Commodity markets are markets where raw or primary products are exchanged. ... Financial instruments package financial capital in readily tradeable forms - they do not exist outside the context of the financial markets. ... Natural capital, as described in the book Natural Capitalism, is a metaphor for the mineral, plant, and animal formations of the Earths biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other ecosystem services. ... Individual capital comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy, non-transferable personal trust and leadership. ... Social capital, referring to connections within and between social networks, is a core concept in business, economics, organisational behaviour, political science, public health, and sociology. ... Instructional capital is a term used in educational administration, to reflect capital resulting from investment in producing learning materials. ... Infrastructural capital refers to any physical means of production or means of protection beyond that which can be gathered or found directly in nature, i. ... A financial future is a futures contract on a short term interest rate (STIR). ... It has been suggested that Short (finance) be merged into this article or section. ... This article is about options traded in financial markets. ...

Broadening the notion

The relationship between financial capital, money, and all other styles of capital, especially human capital or labor, is assumed in central bank policy and regulations regarding instruments as above. For other uses, see Money (disambiguation). ... Capital has a number of related meanings in economics, finance and accounting. ... Human capital refers to the stock of productive skills and technical knowledge embodied in labor. ...

Such relationships and policies are characterized by a political economy - feudalist, socialist, capitalist, green, anarchist or otherwise. In effect, the means of money supply 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. The Politics series Politics Portal This box:      Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government. ... Feudalism comes from the Late Latin word feudum, itself borrowed from a Germanic root *fehu, a commonly used term in the Middle Ages which means fief, or land held under certain obligations by feodati. ... Socialism is a social and economic system (or the political philosophy advocating such a system) in which the economic means of production are owned and controlled collectively by the people. ... For other uses, see Capitalism (disambiguation). ... For other uses, see Green (disambiguation). ... Anarchism is a generic term describing various political philosophies and social movements that advocate the elimination of hierarchy and imposed authority. ... In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ...

So, for instance, rules for increasing or reducing the money supply based on perceived inflation, or on measuring well-being, reflect some such values, 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. This page is on the topic of price inflation in economics. ... The well-being or quality of life of a population is an important concern in economics and political science. ... Theory of value is a generic term which encompasses all the theories within economics that explain the exchange value or price of goods and services. ...

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.

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", "mark-to-market" and "mark-to-future" conventions are three different approaches to reconciling financial capital value units of account. In accounting and finance, the carrying value or carry value of an asset is the amount reported as the assets current nominal worth for accounting purposes. ... This article does not cite any references or sources. ...

Economic role

Socialism, capitalism, feudalism, anarchism, 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. Socialism refers to the goal of a socio-economic system in which property and the distribution of wealth are subject to control by the community. ... For other uses, see Capitalism (disambiguation). ... Roland pledges his fealty to Charlemagne; from a manuscript of a chanson de geste Feudalism, a term first used in the late modern period (17th century), in its most classic sense refers to a Medieval European political system comprised of a set of reciprocal legal and military obligations among the... Anarchist redirects here. ... Civics is the study of citizenship and government with particular attention given to the role of citizens in the operation and oversight of government. ...

Finance capitalism is the production of profit from the manipulation of financial capital. It is held in contrast to industrial capitalism, where profit is made from the manufacture of goods.

See also

• banking
• capital
• capital market
• Capitalism
• finance
• Five Capitals
• funding
• money supply
• list of finance topics
• list of accounting topics
• spiritual capital