Another important economic role of capital is the creation of employment opportunities in the country. Capital creates employment in two stages. First, when the capital is produced. Some workers have to be employed to make capital goods like machinery, factories, dams and irrigation works.Click to see full answer. Then, what is capital and why is it important?We’ve stated earlier that capital is used to absorb shocks during a bank’s worst periods. Capital is important because it’s that part of an asset which can be used to repay its depositors, customers, and other claimants in case the bank doesn’t have enough liquidity due to losses it suffered in its operations.Beside above, what is the importance of capital in business? Capital. Capital is the money or wealth needed to produce goods and services. In the most basic terms, it is money. All businesses must have capital in order to purchase assets and maintain their operations. In other words, the capital simply flows through the investment bank. In this way, what is the role of capital in economic development? Therefore, capital accumulation, by increasing the productivity of the workers, plays an important role in the growth of the economy. Hence, capital accumulation by enlarging the scale of production and specialisation increases the production and productivity in the economy and thereby promotes economic growth.What are the types of capital?The four major types of capital include debt, equity, trading, and working capital. Companies must decide which types of capital financing to use as parts of their capital structure.
