Generally, finance is an organization where we can borrow the money (or) we can invest an amount. Public finance deals with the financial status of the public authorities. Public finance includes all banks. The bank is legally approved by our government. Hence it is safe to invest our money. It is highly protected and there is no chance of any kind of cheating. If we invest our money in the bank then we will get a monthly interest for that amount. The bank is also providing an educational loan, agricultural loans, industrial loans, tractor loans, etc… That’s why people give more importance to public finance.
What are the differences between private finance and public finance?
Private finance deals with an individual point of view but public finance deals with the government authorities. In public finance, we need a proper and permanent record but it is not a mandatory thing in private finance. Public finances use their resources for the social welfare of a people rather than in private finance. An indirect source of income in public finance but we have a direct source of income in private finance. Direct sources in the sense we can earn monthly or weekly income by doing the work. The period of public finance is one year but it may vary from days to months in private finance. The core difference between public and private finance is that public finance deals with the expenditure and revenue of the government sector whereas private finance deals with the expenditure and revenue of a personal or individual sector. At last, the major difference between the two systems is that the transaction in the public sector is well transparent but in the private sector it is kept secret.
What are the similarities between public finance and private finance?
Both the financial system tends to satisfy the peoples need. Both the sectors require a well-functioning of financial administration services. In both systems, the ultimate factor is money. Hence without money both financial systems cannot run.
What are the major components of the financial system?
Four major components include financial assets, financial services, financial institutions, and financiers. Without these four components, the financial system cannot exist. It acts as a pillar of the financial system. We know that the development of our nation depends upon our economy of a country. If we want to improve our economic status then this financial system will be helpful for that one.
What are the areas included in private finance?
The major areas in private finance include savings, income, spending, investment, and protection. If we want to lead a sophisticated life then all these five parameters are necessarily needed for our life. Savings make our future brighter. Spending for our loved ones gives us a pleasant feeling. Income is the process of getting a monthly salary for our work. Protection is the process of safeguarding our money for unexpected events in the future.