What is financial capital?

The concept of financial capital is one of the most used terms in the field of finance. It took on special importance within the capitalist system, especially in the XNUMXth and XNUMXst centuries, and has been one of the bases for the functioning of this economic system worldwide.

Broadly speaking, it is used to refer to the whole of a person's assets that is invested in different financial organizations. If we add it to human capital, we can obtain the total wealth of each individual. Next, we review the meaning of financial capital and its characteristics.

Main characteristics of financial capital

Financial capital groups together those amounts of money that a person saves, that is, that have not been consumed so far. In general terms, we refer to that capital that seeks a profit or interest later on and, with it, the increase of the capital itself. We are, therefore, with different concepts common to all as obligations, state bonus, actions o money deposits in a bank determined.

One of the most significant characteristics of financial capital is the concept of time, since when referring to future income or interest it is closely linked to other economic concepts such as that of purchasing power or the inflation. This situation can occur, for example, in a particular investment, which contemplates a specific starting date on which the deposit is made and an expiration date on which the individual obtains the resulting income.

However, financial capital is characterized by a constant search for profits or benefits in the financial market, whether through stocks, currencies or other financial products. In this way, banks and large multinational companies have been able to develop and thus strengthen the global business fabric, although there has also been a significant increase in financial intermediaries and insurance companies.

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