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Financial Capital

Financial Capital. What is Capital?. Capital is any resource capable of producing other resources. Examples of capital include: cars, machines, buildings, land and money. Public and Private Capital. Public capital are community resources: schools, roads, utilities, parks.

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Financial Capital

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  1. Financial Capital

  2. What is Capital? • Capital is any resource capable of producing other resources. • Examples of capital include: cars, machines, buildings, land and money.

  3. Public and Private Capital • Public capital are community resources: schools, roads, utilities, parks. • Private capital are individual resources: land, buildings, equipment, money.

  4. Financial Capital • Financial capital represents resources that are liquid: having the ability to be turned into other assets. • Common forms of financial capital are stocks, bonds, market futures, letters of credit and money. • Financial capital is extremely mobile today which results in growing problems for rural communities.

  5. Availability of Financial Capital • Loans: short-term or long-term (bonds) funds borrowed from a financial institute. • Stocks: selling shares of a business to obtain financial capital in exchange for dividends and voting rights that determine management controls.

  6. The Rise and Fall of Banks • 1780’s – 1920’s banks were easy to start due to lack of regulations. • During Great Depression, tens of thousands of banks failed. Many were located in rural communities. Federal and State regulation of banks instilled trust in the system and helped insure financial capital would be reinvested into the local communities. • Deregulation of banks in 1980’s caused a change in flow of financial capital. Mostly out of rural communities in search of short-term returns. • “income multiplier”- tool used to determine to what extent capital is reinvested into a community

  7. Maintaining Local Financial Capital • Community Reinvestment Act of 1977: aimed at poor urban areas, rural area at this time seemed stable. • Brownfields Act in 1995 revised the CRA to target a broader range of “low-to-moderate income communities”. • New programs and community foundations are arising to address the financial capital issues for rural communities.

  8. The gov’t that Failed? • Governments can provide tax concessions to certain investments or geographic areas. • Although this can bring more businesses, industries & people into a struggling community, it puts additional stress on publicly provided services, like schools, utilities, roads, etc.

  9. Livingston County Statistics • 1994 total personal income $281,287 Net earnings: 54.0% of TPI Dividends, interest, rent: 27.0% of TPI Personal current transfer receipts: 19.0 of TPI • 2004 total personal income $366,570 Net earnings: 55.6% of TPI Dividends, interest, rent: 20.9% of TPI Personal current transfer receipts: 23.5% of TPI

  10. Livingston County Statistics Continued

  11. Livingston County Statistics Continued

  12. Livingston County Statistics Continued

  13. Business Patterns • In 2003 there were 8,888 jobs in Livingston County. Retail Trade 1,204 Farm employment 845 Manufacturing 828 Local government 799

  14. Income Patterns • Percent of income by Industry Manufacturing 9.2% Local government 7.0% Retail trade 6.5% Construction 4.1%

  15. More Livingston County Statistics

  16. More Livingston County Statistics Continued

  17. Industry Incentives in Chillicothe • Farmers Electric Cooperative Companies offer loan programs of $400K zero-percent interest for 10 years. • Electric services are provided at no cost with no franchise fee’s or facilities charge. • City of Chillicothe offers revolving loan programs. • Chillicothe Industrial Development Corporation (CIDC) provides business loans. • Green Hills Rural Development offers low-cost interest loans. • Chillicothe Industrial Development Authority (IDA) offers revenue bonds.

  18. Resources • Rural Communities Legacy + Change Flora & Flora, 2004. • U.S. Department of Commerce Bureau of Economic Analysis www.bea.gov/ • Chillicothe Chamber of Commerce www.chillicothemo.com/index.html • Chillicothe Missouri http://www.chillicothecity.org/index.html • U.S. Census Bureau http://censtats.census.gov/ • Office of Social and Economic Data Analysis http://oseda.missouri.edu/index.shtml • Images and Photos http://www.google.com/imghp?hl=en&tab=wi&q=

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