Definitions of Finance
Finance is often called the “lifeblood” of the economy, yet its meaning shifts depending on who you ask.
From the art of wealth management to the rigorous science of asset valuation, these 25 definitions from legendary thinkers reveal the multifaceted nature of the financial world.
Let’s look at them:
1. F.W. Paish – “Finance is the provision of money at the time it is wanted.”
2. John J. Hampton – “Finance is the management of the flows of money through an organization.”
3. Howard & Upton – “Finance is the administrative area or set of functions in an organization which relate with the arrangement of cash and credit.”
4. Gitman & Zutter – “The art and science of managing money.”
5. E.W. Walker – “Finance is the body of facts, principles, and theories relating to the raising and using of money by individuals, businesses, and governments.”
6. Parshat & Sharma – “Finance is the art and science of managing money; it includes the process, institutions, markets, and instruments involved in the transfer of money.”
7. Burtchett & Hicks – “Finance is the work of providing capital for a business or a project.”
8. Khan & Jain – “Finance is the study of how people, institutions, markets, and countries generate and use financial resources.”
9. James Van Horne – “Finance is concerned with the acquisition, financing, and management of assets with some overall goal in mind.”
10. Pierre Vernimmen – “Finance is the science that describes the management, creation, and study of money, banking, credit, investments, assets, and liabilities.”
11. John Maynard Keynes – Viewed finance through the lens of liquidity preference and the “state of long-term expectation.”
12. Adam Smith – “Contextual) The study of wealth and the capital used to produce it.”
13. Robert C. Merton – “The study of how scarce resources are allocated over time.”
14. Zvi Bodie – “The study of how people allocate scarce resources over time under conditions of uncertainty.”
15. Harry Markowitz – “Finance as the optimization of risk and return in investment portfolios.”
16. Eugene Fama – “Defined finance through ‘Efficient Markets,’ where prices always ‘fully reflect’ available information.”
17. Modigliani & Miller – “Finance as the study of capital structure and its impact on firm value.”
18. Stephen Ross – “Focused on the ‘Arbitrage Pricing Theory’ – finance as the pricing of risk factors.”
19. Shiller & Akerlof – “(Behavioral) The study of how human psychology and ‘animal spirits’ drive financial markets.”
20. Prasanna Chandra – “Finance is the process of creating, moving, and using money across the system.”
21. Oxford Dictionary – “The management of large amounts of money, especially by governments or large companies.”
22. Investopedia – “A term for matters regarding the creation, management, and study of money and investments.”
23. Encyclopaedia Britannica – “The process of raising funds or capital for any kind of expenditure.”
24. Solomon & Pringle – “Finance is the art and science of managing resources to maximize value.”
25. I.M. Pandey – “Finance is the activity concerned with the planning, raising, controlling, and administering of funds used in the business.”
Hence, these are the 25 influential thinkers who defined finance.
Sujan Chaudhary is an MBA graduate. He loves to share his business knowledge with the rest of the world. While not writing, he will be found reading and exploring the world.