The term Finance is so wide that it changes its definition as the Economy of the World changes. We have 3 types of Economies in our World and the term Finance fits differently in each of them.
Definition of Finance
As per the Oxford dictionary, the definition of Finance means managing large amounts of money, especially by the government or large businesses/institutions.
As per the understanding of a common man worldwide, finance means arranging funds for his/her needs, which he/she, in most cases is unable to afford with his/her current daily earnings.
Some examples where the term finance comes to mind of a common man in his/her daily life:
- Buying a real estate for home/business
- Buying a vehicle like a two-wheeler and four wheeler
- Arranging funds for higher education for his/her kids.
Products/Service offerings of the finance sector for its consumers depends on the economy i.e.
- Developed
- Developing &
- Under-Developed Economy
For example, a Developed Economy population would be needing finance for high-end & luxury items, College education & Specialised Medical Care like Dentistry.
As daily need items like Bread and Butter and a house for family and basic schooling won’t be a concern for them. They could easily afford them with their existing daily earnings.
Example Nations: US, UK & France.
Developing Economies population would be needing finance for meeting their needs more than bread and butter like buying a car, business expansion, buying real estate and much more.
Example Nations : India, Russia & China.
Underdeveloped Economies as the name suggests, here the population would be struggling to meet their basic needs of life like a small house, bread and butter and some money to kick start a business of their own.
Example Nations: Most African & South American Continent Nations.
To conclude, for a common person irrespective of his/her location, whatever he/she needs finance for, depends on what he/she needs the most and whether his/her existing regular income can buy him for it and evaluating all these needs, the local finance sector designs its brochure of offerings.