What is Financial Aid? In finance, one financial bailout is the act of give financial capital to a company that is dangerously close to declaring bankruptcy. The purpose of the bailout is to prevent the company from becoming insolvent. We can also use the term to save countries that are in serious economic trouble.
Sometimes the motive behind bailout is profit. Investors, for example, might see an opportunity if they buy the super-cheap shares of a failing business.
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However, the purpose can also be philanthropic. Philanthropists can resurrect a non-profit business and turn it into a non-profit organization.
Governments sometimes bail out failed businesses if the company's failure could harm the national economy.
For example, some companies that transport people and goods, such as airlines, must not go bankrupt. If the big transport companies went bankrupt, the effect on people's lives would be significant.
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