Finance is a broad term encompassing various things about the study, formation, and management of financial resources and investments. It also can be used in the same context to cover the subject of banking, investing, and business lending. The field is highly diversified, encompassing a wide range of activities and areas. Because of its many aspects, finance continues to grow in both size and importance throughout the world.
Finances science has three main areas of study. They are: micro, macro, and the social sciences. These include such fields as economics, accounting, statistics, supply and demand, portfolio analysis, banking, asset pricing, insurance, investment banking, public finance, private finance, global economics, and international finance.
Micro economics studies the movement of economic activity through time. It focuses on minute details such as the movement of prices across individual fronts. It is extremely important in the study of finance because it accurately predicts economic activity. This is important in the context of banking, because accurate foresight is necessary in making good corporate finance decisions. Other micro topics in this field are: macro economics, which dissects the broad scope of national economies; research economics, which studies the broad scope of the domestic economy; and political economy, which studies the policies, institutions, and agencies that shape the economy.
Macro economics focuses on economic policy issues. It looks at broad term economic issues such as inflation, interest rates, fiscal balance, budget deficits, unemployment, and balance of payments. This area of finance is extremely important to banking because it is required to make certain government policy decisions and also to keep an eye on international trade. Some of the topics that are commonly addressed in this field are: international finance, public finance, national income theory, investment theory, international macroeconomic theory, and government finance. The scope of this area of finance is quite broad and includes such areas as taxation, public finance, corporate finance, economic growth, monetary policy, central banking, economic growth, banking theory, risk management, micro economics, international business, international monetary system, international trade, money flow, fiscal policy, economic growth, international monetary system, portfolio theory, international monetary system, national income theory, and the economic growth concept.
On a more micro scale, micro economics deals with the nuts and bolts of production and business transactions. Micro topics include pricing, cost, technology, decision procedures, quality, and quantity. There are many subtopics in this subfield of finance. One such subtopic is bargaining; where two sides try to attain some kind of a bargain by trading time value of money. Another popular micro topic is time value of money where a person analyzes how fast or slow capital investments should be made to bring about a profit. All these topics are extremely important to banking because they impact all aspects of operations, even when it comes to the largest aspects of banking such as: reserve building, savings and loan, credit, deposit-taking, and lending.
FINANCIAL MANAGEMENT is the final topic in our series on finance. This subtopic of finance deals with the political and economic policies that will affect or prevent market failure. Some of the topics in this subtopic of finance are macroeconomic policies that include interest rates, government spending, taxation, budget deficits, and central bank policy. Some micro topics of financial management are: banking system, bank deposit-taking, business cycle, monetary system, long-term planning, economic growth, budget deficits, and central bank policy. All in all, if you wish to learn about the most important areas of the modern day financial world, then look no further than a world renowned university such as Harvard University.
