The beginning of the word “finance” has a charming past. In this case, canonical definition and etymology of the word “Finance” was given by the Aristotle near about two thousands years ago when there was no concept of financing and related issues.
In Aristotle, Politics, Book I it is clearly mentioned by the author that the finance is a related term that all the countries and government face the situations in which sometimes they need money to buy households and other things important for the life. The people who are not involved in trade and business also need to learn about the finance because it plays important role to develop the basic but strong economic structure of the governments and nations.
Aristotle’s explanation was restricted to those involved with the economical and financial operations of the government and countries but a type of finance concerning marketable nautical and other kinds of jobs loaning thrived in the prehistoric world.
The suggestion of the word started to modify over the time as it traveled from different countries. The word finance first discovered in Latin then into Old French word the “finaunce”. The finance was called as same today in Middle English. In 1700’s, the word started to have a unclearly pessimistic logic as it was used to the behaviors of those involved working in Finance of Courts, the word “rentiers” was used for those people. These investors were maligned by a variety of communal theorists because they were suspected to supply no touchable communal advantage through their loaning tricks to the governments. The sovereignty of that epoch would not qualm ask for to vary as they would not have been able fight with their enemies without having money that comes from the rentiers
In England, an opposed outline was seen with the association of the finance as it rapidly came to be connected with an important commotion. This occurred because the people who were affianced in the doings of Court Finance prearranged themselves politically in order to defend their benefits, wellbeing and comforts in opposition to random royal elimination. At that time it was felt that the rentiers will occupy the royal monarchy to approve new loan schemes and trades. The considerations became true when the royal monarchy approved the loaning trades and business in the country to save the royal succession.
The sagacity of the connotation of the word finance long-drawn-out and became even more optimistic as the previous groups of Court investors lengthened the rapidly increasing region of business and other profitable financing projects. As early as 1800 in the countries where English was the first language the term finance become more popular and similar to the word that is used now days.
The beginning of different terms related to finance such as debt, credit, equity, profits and losses has a great history. There are many terms that are commonly used in finance such as debts consolidation.
It is restoring manifold loans with a solitary loan that is usually protected on assets. The people were offered to get loans by submitting the original documents of their properties such as homes and lands. The property loans were ideal because these played great role to reduce the monthly charges or interests. The interests or loan charges on other types of loan schemes were higher because of many problems but submission of property papers reduced the chance of fraud by the clients. As this loan scheme was secured, the interest rate was also very low for the clients.
Equity: it is the dissimilarity between the worth of a product such as house or land and total sum that is to be paid by the clients. The origin of this term has no specific or clear history because it is the production of new finance world.
Liabilities: it is associated with the amount of all exceptional debts in which a corporation or person lends money by the loan providing companies and persons.
Principal: this term is used to explain the sum of money that is lent without agreeing any concern or supplementary charges such as profits and interests.
Let’s find the definition of these terms in modern world. There are many types and sorts of loans that are offered by the lenders or lending companies but all the terms have more or less same meanings as before because financing principles and rules are changed the basics of finance are same as it was in the time of England royal monarchy. The people who are looking for more information, history and knowledge about the origin and etymology of different important finance terms should study the Aristotle, Politics, Book I because it gives clear ideas about the ancient finance and financing rules that are contradictory with the modern finance terms and principles up to come extent.