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Capital price refers tocapital marketThe last important equilibrium mechanism is the price mechanism. In the capital market, investors will not supply capital to enterprises for nothing, but must pay certain remuneration for the transfer of the right to use capital, that is, capital price.
Capital price refers tocapital marketThe last important equilibrium mechanism is the price mechanism. In the capital market, investors will not supply capital to enterprises for nothing, but must pay certain remuneration for the transfer of the right to use capital, that is, the capital price.Capital price is the indicator of capital allocation. The effective allocation of capital depends to a large extent on whether the information contained in capital price fully reflects the shortage of capital and opportunity cost, that is, whether capital can be allocated to enterprises that can create maximum value.The more perfect the capital market is, the more the capital price formed can reflect the true value of capital, and thus the value of enterprises.Therefore, as long as investors are economically rational, the rise and fall of capital prices can reflect investors' judgments of enterprise value.
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First of all, in the actual market interest, it is necessary to consider the risks and service charges caused by the failure to recover the loans due to fraud, breach of trust and other reasons, as well as the stability of the currency value, the possibility of long-term depreciation and its compensation.However, when discussing the capital price in theory, these factors are generally not considered, so the capital price is also called pure interest or pure interest rate.Secondly, there is often more than one actual market interest rate. Long term interest rate and short-term interest rate are different. Even if they are both short-term interest rates, they will be different due to different risks and purposes of capital use.However, for the convenience of analysis, theoretical analysis often ignores this, that is, theoretical assumption is that there is only one market interest rate.Finally, the actual capital market is not a perfectly competitive market, but when discussing in theory, we assume that the capital market is a perfectly competitive market.
The level of capital price is often related to the time value of funds. The so-called time value of funds refers to the difference value formed due to time factors in the process of using funds. The size of the time value of funds is usually expressed in terms of interest rate (or amount of interest). The essence of interest rate is the profit rate of social funds.Various interest rates (loan interest rate, stock interest rate, bond interest rate, etc.) are determined according to the profit rate of social funds, so the capital price is composed of the time value, risk value and inflation value of funds.The factors that determine and affect the capital price mainly include the following aspects.
Demand for capital
The capital that can bring interest is the loanable monetary capital, sometimes called "loanable capital".Generally speaking, the demanders of "loanable capital" include families, manufacturers, commodity operators and the government.
1. Families need funds mainly for consumption
As the household's recurrent expenditure can generally be spent from the normal income, its demand for funds is mainly to purchase durable consumer goods (housing, auto loans, etc.) and prevent unexpected expenditure (such as accidents, illnesses, etc.).In general, there is a negative correlation between the amount of money demanded by households and the level of interest rates.
2. Manufacturers and commodity operators need funds mainly for investment
The purpose of investment is to make profits.There are two possible sources of investment funds for manufacturers and commodity operators: borrowing from the capital market and using their own capital.Borrowing capital naturally needs to pay a certain amount of interest. In fact, it also needs to calculate a certain amount of interest when using its own capital.Because if manufacturers and commodity operators do not use their own capital, they may obtain certain interest income by lending their own currency through the capital market.In the view of manufacturers and commodity operators, if they expectReturn on investmentIf the market interest rate does not change, the market interest rate is positively correlated with its investment cost, and negatively correlated with its total income. It is based on this comparative relationship that manufacturers and commodity operators determine their own capital needs.
3. The government needs funds mainly to balance fiscal revenue and expenditure and carry out investment activities
When the government's budget is in deficit, it often borrows from the financial market in the form of public debt. The amount depends on the size of the budget deficit, and the occurrence and size of the budget deficit often depend on many political factors.Therefore, the government's demand for capital also depends on political factors, and is often not related to the size of the capital market interest rate.The government's demand for funds due to investment is the same as that of the private sector. It needs to consider the cost and will be affected by the market price, especially in the period of economic depression, when the price of the capital market is low and there are many unemployed people, the government often stimulates economic activities by increasing public spending.
The total demand of the above three aspects constitutes the total demand for capital.The greater the total demand, the higher the price in the capital market;On the contrary, the smaller the total demand, the lower the price in the capital market.
Capital supply
The supplier of capital that can be borrowed is also composed of families, manufacturers and commodity operators, and the government.
(1) The supply of capital by households comes from household savings. Only when household savings appear in the capital market in the form of working capital can they constitute the supply of capital. Therefore, the amount of capital provided by households depends on the ratio of consumption to savings and the way of saving.As a whole, the amount of capital available for borrowing depends on two factors: one is the income level, which is proportional to the amount of savings;The second is the price level of the capital market.When the income level remains unchanged, the price level in the capital market is higher, and household savings increase;On the contrary, when the price of capital market is low, household savings may decline.The amount of household savings is often positively correlated with the price level of the capital market.
(2) The supply of capital by manufacturers and commodity operators comes from their savings and temporary surplus funds.Depreciation funds of fixed assets such as machinery equipment and factory buildings of manufacturers, as well as undistributed profits, public funds and accumulation funds can form savings. In addition, temporary surplus working capital of manufacturers and commodity operators can also form short-term savings. When these funds are provided to the capital market,Manufacturers and commodity operators can thus obtain certain interest income.The relationship between the savings of manufacturers and commodity operators and the price of the capital market is basically similar to that of families. Under certain conditions, manufacturers and commodity operators pay more attention to the comparison of enterprise income and the price of the capital market. If the income obtained is lower than the price of the capital market in the same period, manufacturers and commodity operators may draw out funds to form more savings;On the contrary, it will use funds to invest, reduce the savings of funds, and obtain more income.
(3) The government's supply of capital comes from its power to increase or reduce the money supply.The government uses this power for the need of monetary policy.It is necessary for the government to adjust the money supply according to the development of the national economy, and to affect the price of the capital market by adjusting the money supply, so as to achieve a specific economic purpose.When the price of the capital market rises to a certain level, the government is unwilling to make the price of the capital market rise too fast or too high, and will often increase a certain amount of money supply, so that the price level of the capital market stops rising and has a certain downward trend.
Lending time
Generally speaking, with the extension of borrowing time, the risk of borrowing will increase. In order to compensate the owner of capital, the price of capital market will increase accordingly;On the contrary, the shorter the borrowing time is, the lower the risk of borrowing is. But for borrowers, the income from using capital in the capital market is likely to be reduced, and the risk of repayment is correspondingly increased.Therefore, the shorter the borrowing time, the lower the price of capital should be, so as to stimulate borrowers to repay the borrowed capital as soon as possible.This is in line with the principle that the smaller the risk, the lower the return, and the greater the risk, the higher the return.
Size of loan quantity
Generally speaking, the greater the amount of borrowing, the greater the risk in the capital market will be, so the price in the capital market will be required to increase accordingly;The smaller the amount of borrowing, the lower the risk, and correspondingly, the lower the price of the capital market will be required.
