Final answer:
Finance companies channel funds mainly by issuing debt securities like bonds, which obligate firms to fixed interest payments and allow them to retain control over their operations.
Step-by-step explanation:
Channelling of funds by a finance company, also known as a Balance Sheet Financial Institution (FI), typically involves actions such as issuing debt securities, providing consumer loans, and facilitating government and managing equity investments. These financial institutions function as intermediaries in the financial capital market, operating between savers who supply capital and borrowers who demand loans. Their roles include accepting deposits, using these funds to make loans, issuing bonds to raise capital, and occasionally managing equity investments. One primary method these companies utilize to channel funds is by issuing debt securities, such as bonds, which commit firms to scheduled interest payments, regardless of their income. However, this allows firms to retain control and avoid being subject to shareholders, compared to when they issue stock and sell ownership of the company to the public.