Finance

The finance is a generic term which indicates the study in the way in which the individuals, the companies and the organizations obtain monetary resources and the invest. It is distinguished from the Comptabilité by its prospective vocation: finance takes into account the risk (couple risk/Rendement). It is thus interested in the various actors and the way in which they achieve their goals by the use of dedicated financial tools.

This branch of industry includes/understands in particular the Banque, the Assurance and the purses, the Immobilier, without forgetting the public budgets. Its derivatives are budgetary, monetary, and generally concretize the exchanges between the individuals, the people, the States, the banks, the companies. With the wire of time what was only one form of the transactions whose origin is the Troc became a social science. Finance benefits from the development of the Télécommunications, Internet and contributes to the Mondialisation (see financial Mondialisation). It is the reflection of the transactions of the economic actors.

History

One generally dates the beginning from modern finance, as a field of study and research with 1958. It is as from this time that this discipline became a under-discipline of the economy, by borrowing its formalized reasoning and its mechanisms of optimization to him. Previously, financial management consisted primarily of a collection of practices.

Finance became largely nowadays a trade of instruments and transfer of anticipations of incomes and risks whose prices can be negotiated on markets or near institutions. The risks in particular can be thus transferred to those laid out to take them (against hoped incomes), and the financial intermediaries can practice a compensation of the opposite risks (for example, the exchange rate risk of an importer is opposite of that of an exporter, the risk of rate of a lender is opposite of that of a borrower,…), the diversification of the risks, etc

Principal fields

Finance comprises several shutters, whose principal ones are the following.

  • Finance of market : operation of the large markets on which it is possible to invest, to cover, or to use financial instruments complex, as the option S.

    • the financial markets became since the Années 1980 the principal circuit of financing of the economy, in complement of the Banques. This movement started with the the United States, where the recourse to the markets was always more widespread than in Europe. They include/understand:
      • the markets of actions, which are most known of the general public, but not most active;
      • markets of Credit under development full;
      • the markets of Interest rate which, by their quotations continuously, constitute by far the largest market of planet:
      • the Foreign exchange market or Forex ,
    • There in addition exists many gone of raw materials and basic commodities : Oil, Corn, etc

  • personal Finances (or “private finances”): management of the inheritance and the Returned S personnel, preparation of the retirement.

The financial system

The Financial system is international: it is present in each country, with flows circulating of the one with the other with however certain local restrictions.

It gathers a whole of actors, connected to each other by a communication network, forming a series of specialized financial markets aiming each one at balancing supply and in a particular financial credit. This balance is obtained by the confrontation of the orders between the various actors holders of average monetarists or financial and in particular:

End users

  • the Household S with their saving, and also their loan S
  • the institutions which need money (the Entreprise S, the State S) or insurances against their risks.

Intermediaries

On the level of the financial institutions, the system includes/understands the supranational Banks (for example Central Bank Européenne, the Bank for International Settlements), the national Central banks, the Trade banks, the finance companies, the cases of retirement S, the Social security and the provident funds, the insurance companies, the Treasury, the financial markets.

The superposition of the various financial markets (actions, interest rate, currencies and raw materials) and its extension to all the countries, form the international financial system.

The financial system seeks to facilitate good a Allocation of the capital, favorable to the economic advancement. This central role explains the important place of finance in the developed countries, with a share from 5% to 10% of GDP (Gross domestic product).

Great disciplines within finance

These great disciplines consist of theoretical bodies, of tools for optimization, of theorems, intended to facilitate the financial catches of Décision S.

  • On the level of the Microéconomie

    • Mathematical financial : together of computational tools for the modeling and the Decision-making aid used in the various branches of finance, in particular calculations on the Interest rate S and the financial instruments.
    • Choice of investment : criteria and methods to select Investment S according to their estimated Profitability or of their creation of value.
    • financial Evaluation : estimate of the value of the Active S, that those are financial (action S, obligations, option S, to see Financial credit), or of the Entreprise S (see evaluation of company) or of the real goods.
    • Political financial : choice of the Financing S of the companies, with an aim of optimizing to them Average costs Balanced of Capital (CMPC) . The distribution between the financing by Stockholders' equity and Debt S, the policy of Dividende is key questions of the financial policy.
    • modern Theory of the wallet : optimization of the distribution of the Active S by Diversification. Initially developed for the financial markets, this discipline is also used with the field of the Finance as company. More generally, one speaks about Risk management .
    • behavioral Finance : identification of the individual and collective psychological factors intervening in the financial decisions and their effects on the pricing of the rates and the financial outputs.

See too

Related articles

External bonds and documents

Be-X-old: Фінансы Simple: Finance Zh-yue: 金融

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