Over the years, I have heard two different proposed answers to this question.
It has something to do with parabolic elements of $SL(2,\mathbb{R})$. This sounds plausible, but I haven't heard a really convincing explanation along these lines.
"Parabolic" is short for "para-Borelic," meaning "containing a Borel subgroup."
Which answer, if either, is correct?
A related question is who first introduced the term and when. Chevalley perhaps?