Finance
Finance in a global context is about flows of finance facilitated through financial intermediaries (banks, building societies, City institutions etc). The intermediaries' common function is to provide a link between those who wish to lend money and those who wish to borrow money - they act as a mechanism whereby the supply of funds is matched to the fund for money.
Securities (bonds and equities)
Securities are mechanisms by which government and business can raise finance for the purpose of investment- they are tradable internationally. The two main mechanisms are bonds (a security paying a fixed sum of money each year which is redeemed on its maturity date) and equities (company shares, holders are part owners of the company and share in the company profits by receiving dividends).
Access to finance
Businesses require finance and can raise this through a variety of sources. The two main types of finance are debt finance (loans taking out against company asset) and equity finance- such as Venture Capital and Business Angel investments.
Payment imbalances
The balance of trade forms part of the current account. If the current count is in surplus, the country's net international asset position increases correspondingly. Trade balances are affected by interest rates through the reconciliation of the currency markets- higher interest rates will lead to positive growth in the balance of trade and visa versa.
Last Updated: 6th June 2008
