The financial system is part of the economic operational process and subdivided itself in investment, financing and risk management. It concerns itself with the financial dimension of an enterprise, in particular in which way an enterprise available capital constituted and for which projects it these means begins. The procurement of available capital is called also financing, while the utilization of funds for projects represents an investment. This range of the management economics is occupied with the of projects and their evaluation and/or the evaluation of whole enterprises. This contains the evaluation of own capital funds and outside capital as well as their combinations and the answer of the question, why certain instruments are used for financing.

Important milestones in the development of the modern financial system are the Portfoliotheorie, the Capital ate Pricing Model and the option price theory, from which the range of the risk management meaning today developed.

The traditional aspect: The traditional aspect regards the financialeconomical processes only as auxiliary function: For a given production and paragraph program certain production capacities are necessary, which must be developed if necessary by investments. The capital requirement by the financing of the investments develops, can be covered by different financing possibilities. The financial system has primarily the task to select suitable financing possibilities for the safety device of a financial equilibrium. A financial equilibrium causes the solvency of an enterprise at each time.

The modern aspect: In the modern aspect all economical decisions before the background of financial goals are evaluated. Production and paragraph have only due to and/or the money discharge due to it business meaning. The enterprises pursue excluding financialeconomical goals and use thereby by no means only in-plant investments. Thus operational investments omitted as soon as it better external investments gives, which suggest a higher capital net yield.

Articles in category "Financial system"

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Related Websites

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• Circular No. A-127 -- Financial Management Systems
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  The Treasurer announced on 30 May 1996 the establishment of an Inquiry into the Australian financial system, to report to him by 31 March 1997. ...


• Global financial system - Wikipedia, the free encyclopedia
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