What is finance?

Finance is the medium by which savings are transformed into financing for the economy. This entails three types of risk: A geographical risk: the savings of countries with savings surpluses are lent to countries with savings shortfalls; A duration risk: short-term savings finance long-term investments; A risk of default or failed investment: savings are risk-free, whereas investment finances risky projects. If finance is faced with: A significant transfer of savings from one country (one region) to another; Increasingly short-term and risk-free savings, then its role becomes more difficult and its costs become higher.