Philosophy Research Paper on Literature on Finance

Literature on Finance


Finance is a multi faceted field that encompasses several different stages, development, and applications. It is concerned with the management of the flow of money through savings, investments, and use. Financial practitioners require a higher level of thinking since the financial decisions being made require advanced theoretical knowledge in finance, leadership, and ethics. There are different terminologies and knowledge that is used by researchers and knowledge practitioners in financial management and modeling to form decisions. This knowledge base required for certain financial decisions is dependent on one’s position within an organization, magnitude of the financial decision, and one’s knowledge level. Financial literacy is therefore, a key factor in financial decision-making and there is a pool of resources that is dedicated to this which will be partially highlighted within the research.

Literature on Finance

Description and Familiarity

The field of finance is broad based and is anchored on numerous institutions, resources, knowledge, economics, and technologies, among others. In nonprofessional terms, finance is concerned with the handling of money for personal, public, or corporate institutions with the aim of spending, investing, saving or managing the money. There are numerous applications for finance in the business world, as well as other well established institutions since today’s world is marred with the notion that money is the key to achieving success in a majority of agendas, ideologies, and projects. Consequently, finance seems to play a vital role in the execution of different activities affecting our daily lives due to its penetration into major daily chores, tasks, responsibilities, and duties (Martin, 2007).

Knowledge in Finance

            Finance is concerned with the allocation of assets and liabilities under environments of assurance and ambiguity. The major sections of finance that researchers and practitioners use to understand finance; public finance, corporate finance, insurance, credit management, stocks and bonds, real estate, investment and securities, taxation, valuation, actuary, equities, banking, financial mathematics, and personal finance. These major sections guide researchers and practitioners when analyzing and understanding the field of finance. The intricate terms that these people utilize in analyzing and understanding finance are; interest rates, inflation, monetary policies, capital investment, trade, forex, among others.   

The SPL Model

Finance can be analyzed using several levels by considering its influence on people and institutions, as well as its development, understanding, learning, and use. The context in which finance is used is also important in analyzing and understanding its use and applications. Three levels of analysis of finance will be used, which are; education stage, practice stage, and the leadership or management stage. Each of these stages has different contexts through which finance can be used and analyzed depending on its applicable forms. It is also vital to show the financial literacy that each stage uses since it shows the level of penetration and applicability of finance on a particular situation. These stages are mainly based on the Scholar, practitioner, leadership (SPL) model that acts as a means for forming intricate and elaborate structures that can then be solely used to show one’s scope of knowledge on the field of finance.

The scholar stage of the analysis is involved with the integration and disbursement of knowledge to potential students or people willing to perform some financial activities. The latter is involved with personal banking where an individual has to learn the basics of financing so as to manage, invest, save, and use his/her money to achieve a certain predefined objective. For instance, for the acquisition of a mortgage, an individual has to learn how to manage their accounts, make savings and investments to raise funds for loan repayment and servicing, and learn the basics of having a loan portfolio (Mandell and Klein, 2009). This is mainly involved with personal banking or financing that seeks to instill an individual with knowledge necessary in their formulation of a financial model for their accounts.

Aside from personal financing, a second branch of the scholar stage is the acquisition of knowledge by the students who will learn and broaden their financial education. This stage is important since it serves as the pivot used to bridge the gap between basic financial knowledge and articulate financial knowledge. It also represents the stage where a student learns to manipulate financial decisions to suit their predefined objective while adhering to well-defined codes of ethics and standards that guide financial freedom and management. This knowledge acquisition can be at the diploma, certificate, bachelors, masters, or PHD levels. Each of these represents a certain heightened level or degree of financial prowess since it defines one’s knowledge database that relates to different financial modeling. For instance, a Certified Financial Analyst (CFA) is knowledgeable in some financial manipulations, with the exception that this knowledge is limited and requires additional certifications or higher-level education. This higher-level education such as a bachelor’s degree in business administration, or a master in business administration (MBA) could be useful and more marketable in the financial sector (Schuchardt, Hanna, Hira, Lyons, Palmer, and Xiao, 2009). Additionally, the education would take longer and have more content that is relevant to the financial field.

The scholar is considered as the beginner and not only acquires knowledge in financial modeling, but also theoretical knowledge on ethical principles that would govern their professionalism within the financial field. Such ethics are useful in ensuring that an individual acts in a manner that is responsible and is representative of their higher order level of thinking that forms an absolutionist view (Kuhn, 2012). This form of thought process is well informed and develops over time from merely a theoretical perspective to a generalist perspective where thoughts are seamlessly converted into action that are streamlined to the ethical standards and principles learned in school. This scholar stage is not limited to knowledge acquisition at schools or colleges, but could also involve learning within the work place environment, such as skill acquisition and experience.

According to the SPL model, the practitioner stage is the most important since it acts as an avenue for the individual to apply his knowledge and skills to form sound financial implications and manipulations. Depending on one’s knowledge and training, the individual is able to participate in the decision making process of an institution regarding various financial decisions. For instance, these educational qualifications can be classified according to one’s abilities to perform accounting, business, or quantitative finance decisions. These are some of the sectors that are constituted within the finance field, and represent a smaller and general portion of a much larger field.

Application of the SPL Model

Financial investment is one of the basic fields that are vital for enhancement of concrete financial decisions that affect an organization or individual. It is a field that requires an intricate understanding of the money or equities markets, which involves manipulation of stocks, treasury bills, bonds, capital markets, and forex exchange. This field requires the investment financial analyst to understand such parameters as interest rates, monetary policies, currency exchange rates, stock market portfolios, among many other parameters (Martin, 2007). Consequently, the complicated nature of this field requires individuals with a higher-level of education, employing a higher level of thinking to achieve the desired results (Johnson & Duberley, 2000). The clientele for such a field is enormous and could include organizations, individuals, governments, corporate companies, among others.

Gap in the Literature

An analysis of such a field shows that financial modeling is a crucial method that is widely used in the execution of various financial decisions within a business or organization. Additionally, contrary to popular belief, it is clear that financial decision-making does not only include the creation of mathematical models that assesses the flow and management of money (International Federation of Accountants, 2011). These mathematical models represent the larger portion that constitutes financial modeling since the final decision needs to have considered how the money will manage to suit the needs of the various parties.

For instance, mortgages require the financial analyst to consider such factors as interest rates, client’s credit worthiness, the bank’s loan portfolio, and mechanisms for management of funds, among others. Therefore, from this analogy, the financial analyst has to make a mathematical model of the loan portfolio, followed by an understanding of other pertinent factors that determine one’s need for credit disbursement, and the bank’s financial capabilities (Simson, Sharma and Aziz, 2011, Shiavo-Campo, and Garrity, 2004). This means that the decisions making capability of the financial analyst have to be based on their mathematical prowess, as well as their ability to understand ethical standards, management, and leadership skills.

The ethical standards that need to be applied have to be considerate of the needs of the bank or financial institutions, and the needs of the customer or individual. This is because in some instances, the individual or customer may require financial assistance in form of loans or mortgages, but he/she cannot be able to pay the services. In this instance, the financial analyst has to balance their moral conviction to assist the individual or customer, with those of their employer whose main aim is make a profit from their financial dealings. Therefore, this could result in one having to completely ignore their ethical principles and instead replace them with their professional and work place ethics (Bernstein, 1983).

The employment of one’s professional and work place ethics is a crucial factor in the determination of a financial analyst leadership and management capabilities. This is because it is their duty to cater primarily to the needs of the employer and professionalism, before these of their customers. In this instance, it could seem selfish and inconsiderate for one to consider their interests, rather than those of their customers (Lowe, 2012). However, one core rule that has guided the financial field is that money has no emotions, and is only a tool used to increase the value of a person or individual’s net worth. A contravention of this analogy means that the finance would become obsolete and lack meaning. It would result in anarchy in the world since finance is deeply ingrained into the fabric of management of the world’s resources, citizens, organizations, activities, culture, and economics.

Therefore, one of the primary responsibilities of a financial analyst is to adhere to professional and work place ethics. Management of these principles requires one to forego their moral and cultural convictions and instead focus on developing strategies to combat having to make difficult decisions that affect people and organizations both positively and negatively. Additionally, these decisions have to be structured in a manner that conforms to their educational and professional experience in the finance, management, and leadership skills. Addressing these pertinent is a crucial factor in the development of effective and competent financial analysts.

It is vital that management and leadership skills be applied in the execution of financial decisions. This is because finance is primarily concerned with management of large portfolios of money that belong to outside individuals and corporations. In a business environment, the finance officer has to balance the disbursement of money to various departments in a manner that ensures fairness and effective utilization of resources. This requires a heightened level of financial literacy, as well as concrete knowledge in the management of decisions within the company.

Philosophical Assumptions

Balancing the needs of the organization to ensure effective disbursement of funds to all the useful and operational departments serves as one of the primary techniques used by financial analysts to enhance professionalism in their work. However, the misconception by most people is that the ability to control financial capabilities for companies, governments, or individuals brings with it immense power is wrong. This is because there are rules and regulations that guide people on how the financial decisions should be structured to enhance the quality of the expected outcome (Collins, 2001).

Contravention of these rules and regulations is considered as a form of incompetence and could result in the financial officer being fired from their jobs, or depending on the severity of their impropriety, it could result in criminal charges being leveled against the individual or institution. For instance, cases of financial mismanagement have marred our financial histories in different parts of the world. In the US, such cases as ENRON are attributed to financial mismanagement and have resulted in the companies having to pay large sums of money to cater to the victims, and the financial management team of the company being held accountable for the financial impropriety. This has resulted in criminal charges and convictions of these financial managers, and their assets being frozen and confiscated as a means to catering to the hefty fines and victim compensation as per the court rulings.

Critical Analysis

According to Bernstein, it is impractical for a research, especially in the social sciences to have a concrete and objective result (1983). Therefore, he believes that research in social science should have checks and balances that can be criticized and analyzed more intricately. Consequently, this research on financial knowledge and management is not absolute and requires more data and analysis to improve its quality, credibility, and viability for professional and academic qualifications. Therefore, for the achievement of this outcome, critical analysis of different information is insufficient and instead more knowledge should be derived by analyzing gaps in the existing literature and formulating concrete solutions. Bernstein considers this process as vital since research in the social science encompasses a wide scope of knowledge and understanding, unlike in science where the results are finite and concrete. Subjectivity should be avoided improving on current literature.

For instance, critics of leadership and ethics believe that is not plausible for people to have control of vast resources of finance. This is because it leads powerful decisions been made that affect a large of people both positively and negatively. Primarily, investment and banking institutions hold vast financial resources that belong to individuals and corporations that depend on the funds to generate growth and sustain their daily operations and tasks. Therefore, these critics believe that there are insufficient laws that guide how these financial institutions should conduct their activities (Prawitz, Garman, Sorhaindo, O’Neill, Kim and Drentea, 2006). This would ensure that there are ways of monitoring their activities, as well as checks and balances to determine their ability to securely manage and safeguard the financial resources. This is an objective, rather than subjective view of finance and draws upon existing knowledge to identify gaps in the literature and ways of improving on them (Bernstein, 1983).

This analogy is echoed by the numerous cases of financial institutions becoming bankrupt resulting in people and organizations loosing vast amounts of money due to the financial ineptness of the financial institutions. The laws currently being utilized to control and monitor these financial institutions are considered insufficient to the adequate utilization of resources and management practices for enhancing the quality of services offered (Falahati and Laily, 2011). For instance, banking and other financial institutions are responsible for the provision of capital and funds to cater to the development agenda of individuals and organizations. The interest rates being charged by these financial institutions are considered as being hefty and unaffordable to the loan applicants, while the savings interest rates are minimal. Therefore, this means that these financial institutions are unfairly treating their customers and operating with the primary aim of making profits at their customer’s expense.

Majority of the literature on financial literacy and financial knowledge management is very intricate and well articulated. They address all the pertinent fields of finance, their operational frameworks, and how they positively or negatively the quality of life and service delivery of the financial institutions to their dependants. However, there is very little research on the link between finance and leadership and ethics in the financial field. The limited amount of research material in this field means that the quality of data that is accessible is detailed, but could have a larger and more accurate meaning if more research is conducted. The body of literature covering the understanding of finance is overwhelming and thus caution has to be used when analyzing information to avoid one generating a large volume of data that is related to one primary outcome. Therefore, the field of finance is an interesting research whose wide scope should be adequately researched to get a better understanding of its intrigues.


Bernstein, R. (1983). Beyond objectivism and relativism: Science, hermeneutics, and praxis. Philadelphia, PA: University of Pennsylvania Press.

Collins, J. (2001). Good to great: Why some companies make the leap…and others don’t. New York, NY: HarperCollins Publishers.

Falahati, L. and Laily, H. P. (2011). Toward a framework of determinants of financial management and financial problems among university students. Journal of Business Management 5 (22): 9600-9606

International Federation of Accountants. (2011). 2011 Handbook of International Public Sector Accounting Pronouncements. New York: International Federation of Accountants.  

Johnson, P., & Duberley, J. (2000). Understanding management research: An introduction to epistemology. Thousand Oaks, CA: Sage Publications.

Kuhn, T. S. (2012). The structure of scientific revolutions. Chicago, IL: University of Chicago Press.

Lowe, J. (2012). Developing a new evaluation tool for measuring financial capability in terms of behavioral traits. London, United Kingdom: The Open University.

Mandell, L. & Klein, L. S. (2009). The Impact of Financial Literacy Education on Subsequent Financial Behavior. Journal of Financial Counseling and Planning, 20(1), 15-23.Retrieved from

Martin, M. (2007). A literature review on the effectiveness of financial education. Federal Reserve Bank of Richmond. Working paper no. 07-03.

Prawitz, A. D., Garman, T. E., Sorhaindo, B., O’Neill, B., Kim, J. & Drentea, P. (2006). The In charge Financial Distress/Financial Well-Being Scale: Development, Administration and Score Interpretation. Journal of Financial Counseling and Planning, 17(1), 17.

Schuchardt, J., Hanna, S. D., Hira, T. K., Lyons, A. C., Palmer, L.& Xiao, J. J. (2009). Financial Literacy and Education Research Priorities. Journal of Financial Counseling and Planning 20 (1), 84-95.

Simson, R., Sharma, N. and Aziz, I. (2011). A guide to public financial management literature: for practitioners in developing countries. Overseas development institute. London, UK.