Finance is a major term used in business which is basically an area of expertise dealing with financial matters. Finance can be defined as the science of funds management and the discipline concerned with studying and analyzing how to best utilize the assets of a company. Finance is often called the third major field after marketing and operational management. The discipline of Finance has many sub-disciplines such as financial planning, portfolio management, financial forecasting, and the science of asset allocation. Since the discipline of Finance deals with the allocation of resources of a company, there is an intense need to provide solutions to some of the challenges facing Finance.

Finance is the study of the financial markets and the methods of management of capital. It also includes the application of the theory of demand and supply to help understand the location and future price of certain assets. The scope of Finance is quite broad as it relates to the macroeconomics of a country, but it also includes the micro-economics of a company or organization. In broad terms, Finance can be thought of as the management of the process of making financial decisions. This includes the analysis, assessment, prioritization, implementation, monitoring and evaluation of a company’s financial activities. Finance has various components like cash management, capital budgeting, bank financing, investment banking, leasing, mortgage, derivatives, and international finance.

Contemporary economics is an increasingly important branch of study for professional economists, providing insights that are necessary for understanding the role of Finance in the overall economic framework. Many aspects of contemporary economics are effected by Finance including: the macroeconomic environment, the domestic economy, public finance, government finance, international finance, personal finances, and globalization. A major part of the modern understanding of economics is the contribution of new scientific approaches, specifically from the disciplines of Finance, Management, Business, and Economics. Finance has a significant influence on the overall economic performance of a country. Its significance has become more prominent in the present era, when economic stability is threatened by increasing unemployment and in some countries inflation is threatening to bring down the value of currency.

Alex Wade