What is Finance?
Finance is a term for matters regarding the management, creation, and study of money and investments.
Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting.
According to Ivan Thompson, “the term finance comes from the Latin “finis” which means end or finish. Its implications affect both individuals and businesses, organizations and states it has to do with obtaining and using or money management.”
It is the process of raising funds or capital for any kind of expenditure. The institutions that channel funds from savers to users are called financial intermediaries. They include commercial banks, savings banks, savings and loan associations and such non-bank institutions as credit unions, insurance companies, pension funds, investment companies and finance companies.
Finance can be broadly divided into three categories:
1.Public finance
2.Corporate finance
3.Personal finance
There are many other specific categories, such as behavioral finance, which seeks to identify the cognitive (e.g., emotional, social, and psychological) reasons behind financial decisions.
Public Finance includes tax systems, government expenditures, budget procedures, stabilization policy and instruments, debt issues, and other government concerns.
Corporate Finance involves managing assets, liabilities, revenues, and debts for a business.
Personal Finance defines all financial decisions and activities of an individual or household, including budgeting, insurance, mortgage planning, savings, and retirement planning.
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