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Financial Terms: Financial Contracts

2011/1/6 10:35:00 39

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Economics is the most fertile soil for the establishment and development of finance.

Historically, every major discovery in finance has been made.

Breach

None of them clearly reflects the trajectory of economic development.

The emergence of institutional economics, especially the emergence of new institutional economics, has led economists to shift the focus of scarce resources and economic efficiency from "technical level" to "institutional level".

This great initiative in economics has also aroused the enthusiasm of financiers to study financial problems from the institutional level of property rights.

Since 1979, Smith and Warner have pioneered.

Finance

The term "contract" has so far been studied in western countries about financial contracts.

Achievements

Emerge in an endless stream, but their research scope of financial contract is too narrow, basically defined in the debt contract.

In fact, financial management is a comprehensive management. It not only studies the daily investment, financing and assets operation of enterprises, but also deals with the financial contract arrangement between enterprises and all parties, such as financial control rights and income sharing rights based on the company's property right structure. The debt contract is only one aspect of it.

As the definition of financial contract, we should embody the following three points:

First, we should reflect the attribution of financial contracts.

The financial contracts we studied are based on enterprises.

The two is to reflect the particularity of enterprise financial contract from other contracts.

The three is to cover the types of financial contracts formed by enterprises and various rights subjects.

According to the above analysis, the definition of financial contract is as follows: financial contract refers to a kind of right pfer relationship established by enterprises in the process of financing, in order to achieve reasonable expectations, on the basis of equality and mutual benefit with all rights subjects.

This definition reveals the following contents: the contracting parties of financial contracts are enterprises and various stakeholders. The purpose of financial contracts is to achieve reasonable expectations. The basis of financial contracts is equality and mutual benefit. The nature of financial contracts is a pfer of rights flow in the process of financial management.