Finance describes creation, management and study of banking, money, investment, assets and liabilities and even financial systems. The finances can be divided into different categories and these include public finance, personal finance and corporate finance. There is also a new area emerging in the financial sectors. This is called social finance. The public finance includes tax systems, budget procedures, government expenditures, and stabilization policy and debt issues. The personal finance encompass all financial decisions including the other household budgeting, mortgage, insurance, retirement planning and insurance.
The federal government aids in the prevention of market failure by the process of overseeing resource allocation, income distribution and the economy stabilization. The regular funding of programs is given security through taxation. The insurance from companies, bank borrowing, and even governments and also earn dividends from companies aid federal government and finance.
The local and state government also receive grants and also help from the federal government. Additionally, the charges from ports, airport and other facility charges, fines emanating from breaking laws, revenues from fees and licensing, government securities and bonds also form the sources of the different public finances.
The businesses get finances from different sources ranging from credit arrangements to equity investments. A company may get a loan from a bank or even get a line of credit. The acquisition and proper management of debts can aid a company in its expansion and ultimately grow into profitability.
A start-up business such as a travel marketing agency can get investors, venture capitalists and capital in exchange for ownership. In case a company goes public, it will give shares on a stock exchange and then bring an influx of cash into the company. The established companies may sell their shares or again issue out corporate bonds for the sole purposes of raising cash. On the other hand, business may purchase dividend for stock payment, interest-bearing bank and blue-chip bonds. The firms may also even buy other organizations in order for them to boost their revenue.
The personal finance involves the analysis of any individual or family’s position in its finances, prediction of long-term and short-term needs and the execution of a plan in the need’s fulfilment within the person’s financial constraints. The personal finance represents a personal activity that solely depends on an individual’s earnings, goals, desires and living requirements.
The matters of individual finance include, but are not limited to the purchasing of products for reasons like the use of credit cards, health, life, home insurance, retirement and mortgage products. The issues personal banking is largely considered personal financing and these include saving accounts and checking. Some of the most aspects critical to personal finances include assessment of current financial positions, saving and investments, retirement planning and buying insurance. The issue of personal finance remains strong even though it is a recent development.
Social finance involves the investment put in the social enterprises and these include charitable organizations and even other cooperatives. Rather than largely referred to as outright donation, these investments can also take the other forms of equity and or debt financing. In this area, the investors seek financial services and at the same time social gain in the investment.
The modern forms of social finances include segments of the microfinance, specifically the loans that are granted to the small ventures in the developing countries to enable the enterprises to thrive. The lenders in this scenario earn returns in addition to helping the society improve its living standard and generally benefit the society and the economy at large. It is not solely for financial gain, but also for improving the social welfare of the society.