Eurozone Bank

Eurozone bank lending to business was squeezed further in July despite signs of an economic recovery across the region and European Central Bank efforts to boost credit markets.
Rather than borrowing, businesses overall repaid €26bn in July – only slightly less than the amount they paid back in June – according to ECB statistics that are likely to strengthen the central bank’s view that the rebound remains fragile. Loans to households showed no growth over the past year.
Official UK figures showed businesses slashed investment spending by the most since the 1960s in the year to the end of the second quarter, raising fears over the British economy.
Investments ranging from new building work to vehicles and software purchases slumped by 18.4 per cent, the sharpest year-on-year decline since data began 43 years ago. A slew of company results on Thursday pointed to further cuts ahead.
Economists believe rapidly shrinking investment spending amid a shortage of credit could undermine the recovery this year and next and endanger the UK’s growth prospects.
ECONOMIC FORECAST
Interactive feature on the outlook across Europe
“The further sharp decline in business investment signals serious threats to Britain’s long-term recovery,” said David Kern, chief economist at the British Chamber of Commerce. “Unless this trend can be reversed, the . . . productive capacity of the economy will be damaged, and the country will lack the necessary capital stock to sustain a recovery.”
The eurozone economy has shown signs of growth recently, with France and Germany out of recession.
Germany’s GfK research institute said it expected its “consumer climate” indicator for the eurozone’s largest economy to reach its highest for 15 months in September.
German shoppers’ mood has been helped by relatively stable jobs levels and falling prices – although German inflation data revealed that the country’s brush with negative inflation had ended earlier than expected.
But the risk of a weakened banking sector acting as a constraint on growth remains a serious concern .
Since the economic crisis intensified late last year, the ECB has pumped extra liquidity into the banking system – including €442bn in one-year loans in late June. Jean-Claude Trichet, ECB president, has publicly appealed to banks to provide the credit needed to oil the wheels of recovery and is likely to have lobbied even harder behind the scenes. The difficulty the ECB has faced is deciding whether the slowdown in lending to the private sector has been the result of falling demand or of supply constraints imposed by banks.
Bank lending to eurozone businesses has been negative since February, but the amounts being repaid have picked up recently. German industry groups have warned of a looming credit crunch.
Julian Callow, European economist at Barclays Capital, said: “It tends to be improving profits that will drive the first upswing in investment, and then only after a lag will companies feel confident enough to go out and borrow to fund further expansion in investment.”

Budget

Budget is a document which documents the plan of the business. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment. Also budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.

The main techniques and sectors of the financial industry

An entity whose income exceeds their expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference.
A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Banks are thus compensators of money flows in space.
A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business; this process is known as "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's capital structure.
Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.
Finance is one of the most important aspects of business management. Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.

Corporate Finance

Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.
Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance between these forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit.
Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management – in choosing a portfolio – one has to decide what, how much and when to invest. To do this, a company must:
Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
Identify the appropriate strategy: active v. passive – hedging strategy
Measure the portfolio performance
Financial management is duplicate with the financial function of the Accounting profession. However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm

Personal Finance

Questions in personal finance revolve around
How much money will be needed by an individual (or by a family), and when?
Where will this money come from, and how?
How can people protect themselves against unforeseen personal events, as well as those in the external economy?
How can family assets best be transferred across generations (bequests and inheritance)?
How does tax policy (tax subsidies or penalties) affect personal financial decisions?
How does credit affect an individual's financial standing?
How can one plan for a secure financial future in an environment of economic instability?
Personal financial decisions may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.
Personal financial decisions may also involve paying for a loan, or debt obligations

Finance

Finance is the science of funds management.The general areas of finance are business finance, personal finance, and public finance.Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted.
Finance works most basically through individuals and business organizations depositing money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans.
Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt sold directly to investors from corporations, while that investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.[dubious – discuss]
Central banks act as lenders of last resort and control the money supply, which affects the interest rates charged. As money supply increases, interest rates decrease.