Credit Squeeze Essay Example | Topics and Well Written Essays - 1750 words

Credit Squeeze - Essay Example The long-term decisions and techniques include the Capital Investment Decisions . These are the decisions about which investment is received by the projects weather to finance that investment with debt or equity and when; or whether to pay shareholders with the dividends. Whereas short-term decisions can be listed under the 'Working Capital Management heading. The Corporate Finance deals with current assets and current liabilities short-term balance with focus on inventories; managing cash and short-term borrowing. It must also be noted that Corporate Finance term is also related with investment banking. The service which an investment banker offers is to typically evaluate the investment projects so that investment decisions could easily be made by the bank. (Aswath, n.p., n.d.) There are various definitions given to corporate finance by countries around the world. For instance, corporate finance in the US is used to cover a much wider area for describing techniques, activities, and decisions, which deal with many features of a company's capital and finances. While in the UK, the term 'corporate finance' covering a comparatively smaller area, tends to attach itself with much increased capital transactions so as to create and develop larger businesses. Also in the UK corporate finance, is frequently associated with ownership change in a business, and to some extent connected to corporate transaction that is a potent cause of the development of a new equity structure i.e. a shareholder base, the connected issue of the exchange or purchase of debt or equity. The transactions that are covered are of the following types: Seed raising, and start-up or development of capital expansion. 1. The sale or acquisitions of private companies, the mergers & demergers. 2. Takeovers of public companies (mergers, demergers including both public & private deals). 3. subsidiaries or divisions - typically backed by private equity i.e. similar of companies or buy-in & buy-out management. 4. The issues of equity by firms, having the companies flotation on an established stock exchange so that the capital for development and restructure ownership is raised 5. Capital raising for the refinance and restructure of businesses through other forms of debt, equity, and related securities 6. The financing of joint ventures like, public as well as private partnerships; privatisations project finance, and infrastructure finance 7. The secondary equity issues, either through private placing or via further issues on a stock market. 8. Restructuring and raising debt, when particularly linked to the types of above listed transactions. (Shean, n.p., 2005) What is Credit Squeeze The term 'Squeeze' denotes a period of tight monetary policy; borrowing is tight due to high interest rates. The tight monetary policy, a term opposite of 'easy monetary policy ', is a policy of the central bank intended to curtail inflation by depleting the commercial bank reserves and resulting into