Glossary of Important Business, Economic, and Financial History Terms
By Robert E. Wright, Director of the Thomas Willing Institute for the Study of Financial
Markets, Institutions, and Regulations and the Nef Family Chair of Political Economy,
Augustana College SD
This work is not copyrighted. Instead, it is Creative Commons by-nc-sa. Creative
Commons is a non-profit organization that promotes open access to and the
sharing of creative work.
acceptance (n.): any variety of a bill of exchange, inland bill, draft, or other financial instrument that has
been accepted by the payer as a legitimate claim upon its assets but is not yet paid because the
instrument has not yet matured or has not yet been presented for payment.
accept (v.): to agree to pay a bill of exchange, inland bill, draft, or other financial instrument according
to its usance. See also sight draft, time draft
account books (n.): books (or papers or computer files) where accounts are maintained. See also day
books, double entry, journals, ledgers, single entry
accounts (n.): a record of debits and/or credits maintained by an entity in its account books.
actuarial (adj.): the condition or state of being created by an actuary.
actuary (n.): an entity that computes insurance risks and premiums in a scientifically and statistically
valid way.
acquisition (n.): the purchase, takeover, and balance sheet consolidation of one business entity by
another, typically larger surviving entity.
adverse selection (n.): a type of asymmetric information whereby the highest risks (2) are the most
eager to borrow or insure. See also lemons problem
agency costs (n.): the costs incurred by a principal when its agent does not act on its behalf but rather in
the agent’s own interest. See also principal‐agent problem
agent (n.): an entity enjoined to act on behalf of a principal in some business activity. See also agency
costs, insurance agent
aggregate output (Y) (n.): 1) the sum total of all final goods produced in an economy in some period,
typically a quarter or a year; 2) consumption (C) plus investment (I) plus government spending (G) plus
net exports (NX), as in the equation Y = C + I + G + NX. See also gross domestic product
1|Page
,amortize (v.): to repay a loan by making interest and partial principal payments each repayment period,
typically a month.
amortization (n.): the process of amortizing a loan.
annual (n.): year
annually (adj.): once a year. See also semiannually, quarterly
annuitant (n.): the owner or recipient of an annuity.
annuity (n.): a type of insurance policy that pays the annuitant a sum of money (previously annually but
often today monthly) over a pre‐specified period or during the annuitant’s lifetime or that of his or her
spouse.
ask price (n.): the price at which a dealer will sell a security from its inventory. See also bid price
asset (n.): any good owned by any entity and held on its balance sheet.
asset bubble (n.): the condition when the price of an asset or asset class exceeds its fundamental value
for an extended period.
asset class (n.): a group of similar assets like bonds, equities, or real estate.
association (n.): 1) any one of a number of types of business entity; 2) a type of organization. See also
Building and Loan associations, Savings and Loan associations
asymmetric information (n.): when one party to a contract (buyer or seller) knows more than the
counterparty, such as adverse selection, moral hazard, and the principal‐agent problem.
bad (n.): 1) anything that no entity values at greater than zero; 2) anything that entities are willing to
pay to reduce or eliminate. See also good
Bagehot’s Rule (n.): See Hamilton’s Rule.
balance sheet (n.): a type of financial statement that lists an entity’s assets, liabilities, and capital. So
called because assets must equal (or in other words be in balance with) liabilities plus capital (which can
be negative).
balance sheet consolidation (n.): the act of combining the balance sheets of two or more entities, as in a
merger.
bank (n.): one of a variety of financial intermediaries that accepts deposits and makes loans and/or that
engages in brokerage, merger and acquisition consulting, or securities issuance. See also bank of
discount and deposit, bank of issue, banker, Building and Loan association, central bank, commercial
bank, credit union, depository institution, investment bank, mutual savings bank, private banker, Savings
and Loan association, savings bank, thrift, unit bank, universal bank
2|Page
, bank (v.): to utilize one or more of the services of a bank, particularly to obtain a loan or make a deposit
at a depository institution. See also unbanked
bank of discount and deposit (n.): an archaic term for a commercial bank.
bank of issue (n.): an archaic term for a bank that issued its own bank notes.
banker (n.): an individual engaged in banking as a private banker or as an employee of a bank. See also
financier
bank notes (n.): a form of paper money issued by banks (banks of issue) and generally convertible into
specie at their respective face values at current coin ratings at the bank of issue. See also suspension of
specie payments
bank holding company (n.): a bank that holds one or more other banks as assets on its balance sheet.
bank run (n.): 1) historically, when holders of a bank’s demand liabilities, specifically its bank notes or
deposits, request payment or conversion en masse; 2) today, when creditors refuse to renew short‐term
loans to a bank, also known as a silent run. See also liability run
banking (n.): the activities of a bank or banker such as making loans, taking deposits, and/or engaging in
investment banking.
bankrupt (n.): an entity in a state of bankruptcy in sense 1 or 2 of that word.
bankruptcy (n.): 1) generally, the condition of an entity that has negative net worth, to wit the monetary
value of its liabilities exceeds the monetary value of its assets. 2) the state of an entity that has filed for
protection from its creditors under a bankruptcy law. See also insolvency
bankruptcy law (n.): a statute that determines how a bankrupt entity’s assets shall be used to pay its
liabilities.
base money (n.): any type of money that banks can count as reserves. See also cash, specie
benefits (n.): 1) the non‐monetary compensation of an employee, such as health insurance; 2) more
generally, the utility or resources derived by an entity from some good or activity. See also costs
bill (n.): a short‐dated bond, especially one issued by the U.S. Treasury. See also commercial paper
bill of credit (n.): a type of medium of exchange or paper money issued by the colonial governments of
mainland British North America and often, though not always, made a full legal tender.
bill of exchange (n.): a short‐dated international financial instrument drawn on foreign entity in a
foreign currency. See also inland bill
bid price (n.): the price at which a dealer will buy a security for its inventory. See also ask price
3|Page
By Robert E. Wright, Director of the Thomas Willing Institute for the Study of Financial
Markets, Institutions, and Regulations and the Nef Family Chair of Political Economy,
Augustana College SD
This work is not copyrighted. Instead, it is Creative Commons by-nc-sa. Creative
Commons is a non-profit organization that promotes open access to and the
sharing of creative work.
acceptance (n.): any variety of a bill of exchange, inland bill, draft, or other financial instrument that has
been accepted by the payer as a legitimate claim upon its assets but is not yet paid because the
instrument has not yet matured or has not yet been presented for payment.
accept (v.): to agree to pay a bill of exchange, inland bill, draft, or other financial instrument according
to its usance. See also sight draft, time draft
account books (n.): books (or papers or computer files) where accounts are maintained. See also day
books, double entry, journals, ledgers, single entry
accounts (n.): a record of debits and/or credits maintained by an entity in its account books.
actuarial (adj.): the condition or state of being created by an actuary.
actuary (n.): an entity that computes insurance risks and premiums in a scientifically and statistically
valid way.
acquisition (n.): the purchase, takeover, and balance sheet consolidation of one business entity by
another, typically larger surviving entity.
adverse selection (n.): a type of asymmetric information whereby the highest risks (2) are the most
eager to borrow or insure. See also lemons problem
agency costs (n.): the costs incurred by a principal when its agent does not act on its behalf but rather in
the agent’s own interest. See also principal‐agent problem
agent (n.): an entity enjoined to act on behalf of a principal in some business activity. See also agency
costs, insurance agent
aggregate output (Y) (n.): 1) the sum total of all final goods produced in an economy in some period,
typically a quarter or a year; 2) consumption (C) plus investment (I) plus government spending (G) plus
net exports (NX), as in the equation Y = C + I + G + NX. See also gross domestic product
1|Page
,amortize (v.): to repay a loan by making interest and partial principal payments each repayment period,
typically a month.
amortization (n.): the process of amortizing a loan.
annual (n.): year
annually (adj.): once a year. See also semiannually, quarterly
annuitant (n.): the owner or recipient of an annuity.
annuity (n.): a type of insurance policy that pays the annuitant a sum of money (previously annually but
often today monthly) over a pre‐specified period or during the annuitant’s lifetime or that of his or her
spouse.
ask price (n.): the price at which a dealer will sell a security from its inventory. See also bid price
asset (n.): any good owned by any entity and held on its balance sheet.
asset bubble (n.): the condition when the price of an asset or asset class exceeds its fundamental value
for an extended period.
asset class (n.): a group of similar assets like bonds, equities, or real estate.
association (n.): 1) any one of a number of types of business entity; 2) a type of organization. See also
Building and Loan associations, Savings and Loan associations
asymmetric information (n.): when one party to a contract (buyer or seller) knows more than the
counterparty, such as adverse selection, moral hazard, and the principal‐agent problem.
bad (n.): 1) anything that no entity values at greater than zero; 2) anything that entities are willing to
pay to reduce or eliminate. See also good
Bagehot’s Rule (n.): See Hamilton’s Rule.
balance sheet (n.): a type of financial statement that lists an entity’s assets, liabilities, and capital. So
called because assets must equal (or in other words be in balance with) liabilities plus capital (which can
be negative).
balance sheet consolidation (n.): the act of combining the balance sheets of two or more entities, as in a
merger.
bank (n.): one of a variety of financial intermediaries that accepts deposits and makes loans and/or that
engages in brokerage, merger and acquisition consulting, or securities issuance. See also bank of
discount and deposit, bank of issue, banker, Building and Loan association, central bank, commercial
bank, credit union, depository institution, investment bank, mutual savings bank, private banker, Savings
and Loan association, savings bank, thrift, unit bank, universal bank
2|Page
, bank (v.): to utilize one or more of the services of a bank, particularly to obtain a loan or make a deposit
at a depository institution. See also unbanked
bank of discount and deposit (n.): an archaic term for a commercial bank.
bank of issue (n.): an archaic term for a bank that issued its own bank notes.
banker (n.): an individual engaged in banking as a private banker or as an employee of a bank. See also
financier
bank notes (n.): a form of paper money issued by banks (banks of issue) and generally convertible into
specie at their respective face values at current coin ratings at the bank of issue. See also suspension of
specie payments
bank holding company (n.): a bank that holds one or more other banks as assets on its balance sheet.
bank run (n.): 1) historically, when holders of a bank’s demand liabilities, specifically its bank notes or
deposits, request payment or conversion en masse; 2) today, when creditors refuse to renew short‐term
loans to a bank, also known as a silent run. See also liability run
banking (n.): the activities of a bank or banker such as making loans, taking deposits, and/or engaging in
investment banking.
bankrupt (n.): an entity in a state of bankruptcy in sense 1 or 2 of that word.
bankruptcy (n.): 1) generally, the condition of an entity that has negative net worth, to wit the monetary
value of its liabilities exceeds the monetary value of its assets. 2) the state of an entity that has filed for
protection from its creditors under a bankruptcy law. See also insolvency
bankruptcy law (n.): a statute that determines how a bankrupt entity’s assets shall be used to pay its
liabilities.
base money (n.): any type of money that banks can count as reserves. See also cash, specie
benefits (n.): 1) the non‐monetary compensation of an employee, such as health insurance; 2) more
generally, the utility or resources derived by an entity from some good or activity. See also costs
bill (n.): a short‐dated bond, especially one issued by the U.S. Treasury. See also commercial paper
bill of credit (n.): a type of medium of exchange or paper money issued by the colonial governments of
mainland British North America and often, though not always, made a full legal tender.
bill of exchange (n.): a short‐dated international financial instrument drawn on foreign entity in a
foreign currency. See also inland bill
bid price (n.): the price at which a dealer will buy a security for its inventory. See also ask price
3|Page
