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External Finance

   Also found in: Wikipedia 0.01 sec.
External finance
Funding that is not generated by a firm's operations: new borrowing or a stock issue.

External Finance
Financing for a company that comes from a new issue of stocks or bonds. That is, external finance occurs when a company looks outside itself to raise capital; rather than using its retained earnings or depreciation, it issues securities. See also: Internal Finance.


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Background The connection between external finance and fixed capital formation is based on financial market imperfections resulting from informational asymmetries.
 
 
 
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