What Are Financial Covenants?

Economics is the most fertile ground for the establishment and development of finance. Historically, every major discovery and breakthrough in finance has clearly reflected the trajectory of economic development. The emergence of institutional economics, especially the new institutional economics, has shifted the focus of economists on scarce resources and economic efficiency from the "technical level" to the "institutional level". This great pioneering work of economics has also aroused the enthusiasm of financial scientists to study corporate financial issues from the institutional level such as property rights structure.