Finance is a broad term for things about the financial management, production, and allocation of funds and investments. In particular, it concerns the questions of why and how an individual, institution or government takes the funds necessary for its growth and how they use or spend that capital. The principles governing the study of finance are referred to as economics. These include such subjects as market economics, business economics, investment economics, government finance, banking, financial theory and policy, as well as other related fields.
Public policy also has much to do with economics. Public policies affect the supply of resources, create demand, regulate prices, allocate resources, protect resources and promote capital formation. Public policy is intimately connected to economics because public policies are designed to promote the efficient utilization of economic resources. Public policy also has many principles that are directly or indirectly related to economics.
One of the major subject areas in economics is information systems. Information systems are required to facilitate efficient decision making by individuals, organizations and businesses. An example of an information system is the computer network. Many of the techniques and strategies used in modern day economics are based on information systems principles.
Another major subject area of finance is managerial economics. Managerial economics is concerned with the activities of the managers of large corporations. Its focus is on the organization’s internal processes, as well as external processes and activities. This area of study seeks to solve important economic problems through effective and efficient management. Examples of managerial economics techniques used in modern day corporate finances are: scheduling, cost accounting, productivity analysis, financial decision making, human resource management, marketing and advertising, and internal control systems analysis.
The third major area of finance that affects the economies of countries is business finance. This term refers to the techniques and strategies used by businesses to raise capital and meet other financial obligations. Business finance strategies can be used to increase cash flow, reduce financial risk, secure raw materials and energy sources, expand into new markets, or increase corporate welfare. Some of the techniques used to improve business finance include: hedging (betting against loss and protecting profits), venture capital, internal financing, market exposure, financial consulting, market access, product pricing, franchise associations, owner financing, financial services, and financial spread betting. Some of the products that businesses use in business finance are: corporate bonds, corporate stocks, business mortgages, venture capital loans, merchant cash advances, note financing, financial debt, credit card trading, and financial derivatives.
The fourth main article is “exogenous risk management”. This term is used to describe risk management activities not linked to the main economic cycle. Examples include: experimental finance, portfolio management, insurance and portfolio risk management, and financial spread betting. These risks are normally considered as short-term risks; however, this article also includes medium-term and long-term risks.
The fifth topic is economics of finance. This is the subject of macroeconomics, which studies the interactions of economic agents and institutions around the world. Emphasis is placed on micro economics, which studies the interactions of individual agents in the financial system.
The sixth topic of finance is microeconomics, which is the study of individual decisions, which are affected by macroeconomic factors. Examples of micro topics in economics are: microollatures, microfounded theories, microfounded policy, microfounded analysis, decision theory, decision sciences, decision theory, aggregate economic units, output pricing, capital budgeting, and micro business lending. The topics of finance comprise many more subtopics. Finance curriculum vitae are often very detailed, covering all the major areas of economics. Most curriculum vitae will also mention the APA’s list of core areas of economics.