Finance is a broad term encompassing many things about the financial management, development, and measurement of financial resources and investments. In particular, it concerns the issues of why and how an individual, firm or government get the funds necessary to satisfy their economic objectives-called capital in the business context. The key factors of analysis are time preference, interest rates, risk, and flexibility. These in turn depend on the objectives of the individual or group making the investment decisions, as well as the characteristics of the instruments involved. The three areas of Finance are Law, Statistics and Business. Finance focuses on budgeting, borrowing and issuing securities.
Finance can be of several types such as personal, business or government finance, but finance mostly deals with banks and other financial institutions, including central banks. A bank makes loans to other banks and then lends its own funds to businesses, individuals and governments. Finance is also involved in other aspects of banking, such as purchasing bank assets and recovering them for customers. This involves purchasing the assets of other banks, borrowing funds from banks and issuing commercial paper.
Finance has many aspects, which make up a comprehensive system of financial instruments and concepts. As an example, consider the difference between savings, income, lending, purchasing and maturity. In fact, even the concept of finance is so broad that it includes such diverse areas as market economics, corporate finance, fiscal policy, international trade, and housing finance just to name a few.