The Difference Between Finance and Business

Finance and business are interrelated disciplines that really inform each other, though the details are different. Finance, as an academic discipline, is closely tied to economics; it usually includes analyzing loans, banking, credit, portfolios, and many other aspects of today’s complex financial systems. It is also useful in the economic analysis of companies, governments, and individuals. Finance affects every aspect of human activity, from production to marketing, from operations to financial affairs.

Although the two have many common elements, economics and finance still differ fundamentally with regards to their purposes. Finance attempts to identify how money is made and conserved, whereas economics looks at the wider contexts in which markets operate. For example, it examines how public investments affect both borrowing and lending, interest rates, financial liquidity, asset quality, inflation, employment, production, technology, government support, and entrepreneurship.

As stated above, finance and business are often used together, especially in the analysis of corporate finance, financial engineering, alternative investment funds, investment banking, quantitative easing, insurance financing, and the overall health of the global financial systems. These include the United States, Japan, Europe, Australia, Canada, and many other countries. Both economics and finance are needed for economic growth. While finance is concerned primarily with how money is made and saved, economics helps in creating policies that will make money work better.