Competition of Funds in the Market

Introduction

When a business ventures into the market to sell a product, it becomes vulnerable to competition. There are different factors considered in business competition. Competition of funds is one kind of competition that can considerably affect the sales that a business makes. Therefore, it is a topic worth discussion.

Competition of Funds Research

The first factor considered in competition of funds is that between private banks and financial firms. These two parties compete to supply consumers with checkable deposits and traveler’s checks of different brands. They also engage in competition of offering credit cards to substitute the use of paying ready money. In some parts of the world, private banks still offer paper money. This includes countries like Scotland and Northern Ireland (Stelzner 2011). This is one type of competition that can prove disastrous to a financial firm. It may lead to loss of customers and clients if not well curbed and foreseen.

In the competition of funds, another factor that is considered is currency. Each currency competes with the other. Each currency tries to be the one in which portfolio assets and international contracts are denominated (Hill 2008). Therefore, if a business is conducting international operations, this competition is inevitable. This is competition that the business can do extremely little about. The currency that  is used in the country in which the business exists could be a limiting factor. Therefore, as a business considers other forms of competition in its planning, it should ensure that it incorporates monetary competition. The business may play all is cards right but fail as a result of competition for funds (Burnett 2010).

Conclusion

There are kinds of competition which are healthy for businesses. However, monetary competition is not healthy for the global market. Therefore, most national governments try to limit it. They ensure maintenance of government monopolies over issuance of paper currency as well as coinage. This protects investors from competition of funds.