Final answer:
Structural bonds are created through technology-based customized services that increase a client's productivity, typically forming deeper business relationships. Unlike standard financial bonds, structural bonds are integral to a client's operational workflow. The choice between bank borrowing and issuing bonds varies based on firm size and the financial capital needed.
Step-by-step explanation:
Often, structural bonds are created by providing customized services to the client that are technology based and make the customer more productive. Such bonds occur when customized services are integrated into the client's operations, leading to an increase in productivity and efficiency for the customer. In contrast to more generic financial tools, like bonds or loans, structural bonds represent a deepening of the relationship between a service provider and their client through tailored solutions that become ingrained in the client's workflows.
For example, while bank borrowing is often more customized than issuing bonds and usually works better for relatively small firms due to the personalization enabled by banks' ability to closely monitor the firm's finances, issuing corporate bonds is a common approach for relatively large and well-known firms to raise financial capital. Bonds are a financial contract in which the borrower agrees to repay the amount borrowed along with interest over a specified period. The selection between bank loans and bonds is not fixed and depends on various considerations like the size of the loan and the firm's standing in the marketplace.