Banking and finance
Banking and finance is the study of financial institutions, money, credit, and the markets and systems that allocate financial resources.
Money: A generally accepted medium of exchange, unit of account, and store of value. Money underpins payments, lending, and the measurement of financial obligations.
Financial intermediation: The channeling of funds between savers and borrowers through institutions or other intermediaries. It describes how banks and other institutions connect sources of funds to users.
Commercial banking: Banking activities that provide deposits, payment services, and loans to households and businesses. It is a central institutional setting for studying deposits, lending, and payments.
Efficient-market hypothesis: The proposition that asset prices rapidly incorporate available information. It provides a benchmark for judging whether market prices systematically misvalue assets.
Credit: An arrangement in which one party provides resources now in exchange for repayment later. Credit connects borrowers and lenders through promises about future payment.
Fractional-reserve banking: A banking system in which banks hold only part of deposits as reserves and lend or invest the remainder. This model links deposit creation, bank lending, and the management of liquidity.
Central banking: The functions and policies of a central bank, including monetary policy and oversight of payment or banking systems. Central banks influence credit conditions and help maintain financial stability.
Behavioral finance: The study of how psychological biases and social influences affect financial decisions and markets. It challenges models that assume investors always make fully rational choices.
Financial institution: An organization that provides financial services or intermediates financial transactions. Banks are one kind of institution within the field’s broader institutional landscape.
Payment system: The institutions, rules, and technologies that transfer monetary value between participants. Payment systems are core infrastructure for banking and financial exchange.