Capital Structure in Developing Countries and Developed Countries

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Capital Structure in Developing Countries and Developed Countries

Market Oriented Financing

The resources of the company are the fundamental basis for its operation, to obtain cash in the short term can somehow ensure the validity of the company in the market. The successful functioning of the industry is impossible without the use of effective methods of financial management of enterprises, including formed at the expense of borrowed funds. One of the promising tools for securing financial resources is corporate bonds. Currently, companies are experiencing serious shortages-established based on a synthesis of best practices based on actual economic conditions in the country and the region (Booth, 2001).

Proper use of sources of investment funds should contribute to the economic development of developed and underdeveloped countries. Formation of the investment market is a necessary condition for solving the problems of accumulation of investment resources, the transformation of savings into investment, and improving efficiency. As the investment market acts as a form of realization of the investment process, the main factors affecting the investment process, and is crucial in shaping the investment market. On the one hand, it reflect the characteristics of investment activity in the previous economic conditions, defined as the specific role of the state monopoly of the investor, on the other hand, are associated with the methods of market reform (Teoh, 1998).

Bank Oriented Financing

Banks offer a diverse set of its products and services, each of which a businessman can choose the most suitable for him it is a financing tool. Following are the full range of banking facilities: short-term financing in the form of an overdraft, term loan, line of credit, repo operations with the goods; trade finance, medium-and long-term lending in the form of depreciating credit, investment lending, project finance, factoring; assistance in obtaining loans from non-residents (Alti, 2006).

Different types of bank financing require a different approach to the loan, a different set of documents confirming the solvency of the borrower, as well as different payment schedules to the bank. Depending on the kind of company, it can use for the most attractive ways to bank financing. For example, among the companies working in the retail trade, the most popular are overdraft and factoring, for manufacturing companies - trade finance, and transportation companies to become the best bank financing in the form of investment lending. The study of the credit agreement, reducing payments to the ...