We often hear about direct financing and indirect financing. What's the difference between direct financing and indirect financing?

direct financing mainly refers to capital market financing, mainly issuing stocks and transferring stocks through the property rights market. indirect financing mainly refers to bank financing, including private loans, which is essentially the money borrowed through the intermediary of banks, and the bank has become more and more. Therefore, it is called indirect.

The difference standard between direct loan and indirect loan:

The difference standard between direct loan and indirect loan lies in the form of the relationship between creditor's rights and debts. Direct financing activities appear before indirect financing, which is the basis of indirect financing, and indirect financing greatly promotes the development of direct financing. In modern market economy, direct financing and indirect financing develop in parallel. Mutual promotion.

The advantages of direct financing are

(1) the supply and demand of funds are closely related, which is conducive to the rapid and rational allocation of funds and the improvement of efficiency in use.

(2) The financing cost is low and the investment income is large.

The disadvantages of direct financing are

(1) There are many restrictions on the amount, term and interest rate of funds for both parties. < p Low realization ability. (3) The risk of direct financing is very high.

The advantages of indirect financing are

(1) flexibility and convenience.

(2) high security.

(3) Improved financial economies of scale.

The disadvantages of indirect financing are

(1) The direct connection between the capital supply and demand sides is cut off to some extent.