Finance is a term which loosely describes the study/research of the system of money, investments, & other such financial tools.
Finance can be divided into three specific categories:
1. Public Finance
2. Corporate Finance
3. Personal finance
Very recently, another facet of finance, known as Social Finance has also emerged. A psychological study on finance also exists, which is known as Behavioral Finance, which aims to find the cognitive reasons behind financial decisions.
The core concept of finance as a branch of theories & practicing connected with economics came into existence in the 1940s & 1950s with the works laid down by Markowitz, Tobin, Sharpe, Treynor, Black, Scholes & many more. The main areas of study in finance are money, banking, lending & investing.
In the modern era, finance is typically broken down into the three aforementioned categories. Public finance includes the tax system, government costs, budgeting, stabilization policies & tools, debt issues & aspects which concerned with the government.
Corporate finance includes the management of assets, liabilities, revenues & the debts of a business.
Personal finance encompasses all the financial decisions & undertakings of a person or a family, which includes fixing a budget, insurance, planning of mortgage, savings plans, & the planning of retirement.
Alongside the three main modes of finance, there is social finance & behavioral finance.
Social finance refers to the investments made by social enterprises such as charitable organizations & a few co-operatives.
Behavioral finance is a sub-branch of behavioral economics which implements psychology-based theories for the explanation of an anomaly occurring in the stock market, which may include severe rises of falls in the prices of stocks.
Finance as a whole can be described as an amalgamation of both art & science since it has its roots deep into scientific areas such as statistics & mathematics. Moreover, a lot of finance-based theories can be co-related to scientific or mathematics-based formulas.
On top of that, the fact that the financial industry includes many non-scientific elements pose its artistic side. It has been proven that human emotions can play a vital role in many facets of the financial world.
Describes the study, system of money, public finance, corporate finance, personal finance, a psychological study on finance, mathematics-based formulas