Banking question?

View your credit file based on any of the UK credit reference agencies, or all three at once
LifeLock is the only Identity Theft Prevention Solution backed by a one-million dollar guarantee!Click here to get a 10% discount.

LifeLock Identity Theft Prevention - Save 10%

It appears that the most important source of external funds to finance businesses is bank loans and not stocks or marketable debt. How you would explain this stylized fact.

Banking question?

The process of getting a bank loan is immeasurably easier when compared to the hurdles you have to clear in order to issue stock or marketable debt.

Banking question?

the boss probably wants to own the whole business. when issueing stock, you like creating co-owners. they might be able to become the real boss if they own the most shares.

also when issueing stock, it cuts into your profits. Some of your profits go into dividends.

so when you borrow from a bank, you're the sole boss and you get to keep all of the profits within the business.

Banking question?

Topic