The meaning and essence of finance

The essence of finance is value circulation.

There are many kinds of financial products, including banks, securities, insurance, trusts and so on. Finance involves a wide range of academic fields, including accounting, finance, investment, banking, securities, insurance, trust and so on.

Finance is a trading activity, and financial trading itself does not create value. Then why does it make money in financial transactions? Mr. Chen Zhiwu believes that financial transactions are a way to realize future income, that is, tomorrow's money will be spent today.

Simply put, the frequency of financial transactions is an important indicator reflecting the economic prosperity of a region, a region and even a country.

The concept of traditional finance is a subject that studies the circulation of money and funds. The essence of modern finance is the capitalization process of business activities.

The western definition, the New palgrave Dictionary of Economics, refers to the operation of the capital market, the supply and pricing of assets. Its basic contents include efficient market, risk and return, substitution and arbitrage, option pricing and corporate finance.

In addition to the in-depth development within the discipline, the trend of interdisciplinary and innovative development in the financial field is very obvious, and many striking emerging frontier disciplines have emerged, such as evolutionary finance, a new frontier discipline between biology and finance, and securities evolution analysis theory (EAS), a frontier discipline between biology and securities.

Gold once became the only medium of international trade. In the era of barter economy, businessmen can only carry out counterpart transactions and barter. Therefore, human economic activities are greatly restricted. In the era of gold standard economy, value and wealth are based on physical assets-gold. This objective physical method is very beneficial to the stable development of the global economy.

However, as the carrier of value circulation, gold's disadvantages, such as inconvenient physical conditions such as handling, carrying and conversion, make it give way to more flexible paper money (currency).

Nowadays, the monetary economy not only replaces the original barter economy, but also covers the gold standard economy. While monetary economy has brought unprecedented economic freedom to mankind, it has also brought many troubles and problems such as unbalanced world trade, inconsistent values, inflation, currency depreciation and ups and downs of economic development.