Finance Companies

Because commercial banks are depositary institutions, governmental regulations applicable to their operations are both (a) more numerous and (b) more restrictive than are the governmental regulations applicable to finance companies (Saunders & Cornett, 2006). The more restrictive regulatory requirements applicable to commercial banks result in more restrictive credit policies at commercial banks than is generally true of finance companies. Finance companies compensate for the additional risk associated with less restrictive credit policies by charging higher rates of interest than those charged by commercial banks (Saunders & Cornett, 2006).

Many finance companies are closely associated with specific manufacturers. An important function in such finance companies is the facilitation of the sales of the associated manufacturer's products by providing convenient credit for purchasers (Saunders & Cornett, 2006).

The process of asset transformation converts one type of fin

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Approximate Word count = 812
Approximate Pages = 3 (250 words per page)

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