Reconstruction Finance Corporation

Examples of Reconstruction Finance Corporation in the following topics:

• Congressional Initiatives

  • The final Hoover Administration attempt to rescue the economy occurred in 1932 with the passage of the Emergency Relief and Construction Act, which authorized funds for public works programs and the creation of the Reconstruction Finance Corporation (RFC).
  • The Reconstruction Finance Corporation (RFC) was an independent agency of the United States government, whose initial goal was to provide government-secured loans to financial institutions, railroads, and farmers.
  • The estate tax was doubled and corporations were taxed at a higher rate of 13.75%.

• The World Bank

  • The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), whereas the former incorporates these two in addition to three more: International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).
  • The International Bank for Reconstruction and Development (IBRD) has 188 member countries, while the International Development Association (IDA) has 172 members.Each member state of IBRD should be also a member of the International Monetary Fund (IMF), and only members of IBRD are allowed to join other institutions within the Bank (such as IDA).

• The Importance of Finance

  • Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make those decisions.
  • The primary goal of corporate finance is to maximize shareholder value.
  • Although it is in principle different from managerial finance, which studies the financial decisions of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to financial problems of all kinds of firms.
  • The terms corporate finance and corporate financier are also associated with investment banking.
  • Thus, the terms "corporate finance" and "corporate financier" may be associated with transactions in which capital is raised in order to create, develop, grow, or acquire businesses.

• Functions of Corporate Finance

  • Corporate finance utilizes tools and analysis to make sound financial business decisions.
  • Corporate finance deals with monetary decisions that business enterprises make and the tools and analysis utilized to make the decisions.
  • Corporate finance is concerned primarily with making investment and financing decisions; that is, making sure that money is being used in the best way.
  • The corporate finance department of a company is in charge of budgeting.
  • The corporate finance department must also determine how to finance projects.

• Role of Finance in an Organization

  • The primary role of corporate finance is to determine how best to maximize shareholder value.
  • Corporate finance is the area of finance dealing with monetary decisions that business enterprises make.
  • When finance is talked about in the context of business decisions, it is called corporate finance (technically, corporate finance deals only with corporations, while managerial finance deals with all types of companies, but we will use the terms interchangeably).
  • There are other branches of finance such as personal finance (individuals taking care of their money) and public finance (the finances of the government).
  • The primary goal of corporate finance is to maximize shareholder value.

• Pros and Cons of a Corporation

  • The corporation is one type of business structure.
  • This limited liability also makes financing more attractive from a risk perspective.
  • Similarly, the corporation does not cease to exist with the death of shareholders, directors, or officers of the corporation.
  • Another benefit of the corporate structure is that, in the United States, corporations are generally taxed at a lower rate than are individuals.
  • S corporations are merely corporations that elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.

• Websites

• Reasons to Study Finance

  • Finance is relevant to all business functions, the macroeconomy, and personal finances.
  • Finance plays an involved role in the health of the overall economy, which impacts everyone, regardless of whether or not they have studied finance.
  • Like corporations, individuals are faced with investment and financing decisions.
  • Individuals cannot sell equity like corporations, but they can choose to either dip into their savings or take out loans.
  • Of course, finance is an important field of study for those who have a desire of working in finance or accounting.

• Corporate Taxes

  • Corporate taxes are especially complicated because of the inherent complexities of corporations themselves.
  • Corporate taxation differs depending upon the legal form of the corporation.
  • A C corporation refers to any corporation that is taxed separately from its owners.
  • Owners of C corporations are personally protected from any liability of the company - an idea known as the corporate veil.
  • Shareholders generally cannot include corporations or partnerships (certain trusts, estates and tax-exempt corporations are permitted).

• Long-Term vs. Short-Term Financing

  • Long-term financing is generally for assets and projects and short term financing is typically for continuing operations.
  • Achieving the goals of corporate finance requires appropriate financing of any corporate investment.
  • A corporate bond is a bond issued by a corporation to raise money effectively so as to expand its business.
  • Short-term financing can be used over a period of up to a year to help corporations increase inventory orders, payrolls and daily supplies.
  • It is issued by large corporations to get financing to meet short-term debt obligations.