Money serves as a medium for exchanging goods and services for the fairly valued market rates. The term ‘Finance’ is an Art of managing the financial resources effectively. So it is very essential for us to gain an insight of the Financial System in order to take appropriate decisions at the time of high risks and uncertainties at the time of economic crisis. Finance refers to the science of dealing with the investments with good returns in a specific time frame.
The three main components that form a Financial System are – Markets, Assets and Financial Institutions. The more we learn about the constituents of the Financial System, the better we understand about them. Finance is further fragmented into three subdivisions based on the usage of the financial resources – Personal, Public and Corporate.
Personal Finance focuses on the management of the individual’s finances in the following areas – payments for Education, Real Estate, Cars, Insurances and Investments and Savings for future planning.
Corporate Finance focuses on the sources for funding the Organizations. It concentrates on the various strategies that the Managers apply to increase the Organization’s value to the stakeholders.
Public Finance primarily focus on the investments on the public entities and government supporting entities.
A country’s growth depends on the Economic status to arrive at the GDP (Gross Domestic Product) value, which is measured by calculating the sum of the total goods and services manufactured in the country within the specific timeline.