FINANCE

Finance is a broad term that describes activities associated with banking, leverage or debt, credit, capital markets, money, and investments. Basically, finance represents money management and the process of acquiring needed funds. Finance also encompasses the oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that make up financial systems.

Types of Finance

Since individuals, businesses, and government entities all need funding to operate, the finance field includes three main subcategories: personal finance, corporate finance, and public (government) finance.

Personal finance

Financial planning involves analyzing the current financial position of individuals to formulate strategies for future needs within financial constraints. Personal finance is specific to every individual's situation and activity; therefore, financial strategies depend largely on the person's earnings, living requirements, goals, and desires.

Corporate finance

Corporate finance refers to the financial activities related to running a corporation, usually with a division or department set up to oversee those financial activities.

One example of corporate finance: A large company may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help them market the securities.

Public finance

Public finance includes tax, spending, budgeting, and debt issuance policies that affect how a government pays for the services it provides to the public.

The federal government helps prevent market failure by overseeing the allocation of resources, distribution of income, and economic stability. Regular funding is secured mostly through taxation. Borrowing from banks, insurance companies, and other nations also help finance government spending.

Financial Services

Financial services are the processes by which consumers and businesses acquire financial goods. One straightforward example is the financial service offered by a payment system provider when it accepts and transfers funds between payers and recipients. This includes accounts settled via checks, credit and debit cards, or electronic funds transfer.

What Are Financial Activities?

Financial activities are the initiatives and transactions that businesses, governments, and individuals undertake as they seek to further their economic goals. They are activities that involve the inflow or outflow of money. Examples include buying and selling products (or assets), issuing stocks, initiating loans, and maintaining accounts.

When a company sells shares and makes debt repayments, these are both financial activities. Similarly, individuals and governments are involved in financial activities, such as taking out loans and levying taxes, which further specific monetary objectives.