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INTERNATIONAL FINANCE

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  1. INTERNATIONAL FINANCE Ashalakshmi.R.K

  2. Introduction-Finance • Finance –study of money management • Finance –guides and regulates investments decision and expenditure • Finance –flow of money, availability of funds etc

  3. Types of finance • Direct and indirect finance • Public finance • Corporation finance • Business finance • Project finance • International finance

  4. International- ”among nations’ • Finance-……………………. • International finance can be defined as the flow of money among different nations and its management

  5. International finance – • Export finance • Import finance • INDIA a vital participant in international trade • Policy of liberalization

  6. Finance function • Accounting and control • Treasury management • These two functions are interdependent……..how?

  7. Accounting , reporting and internal control • Financial analysis, planning, acquisition deployment

  8. Significance of International finance • 1. Growing economic interdependence among nations: • Post world war economy • International trade has expanded at a faster rate than world output

  9. Export and imports as a percentage GNP has remarkably high • Many less developed economies – • Reap the advantage of territorial division of labour • 1991 –INDIA the most suited example

  10. 2.Internationalization of world economy through GATT (WTO): • Reinforced after the eighth Uruguay round of GATT(General agreement on Tariff and Trade)

  11. Formation of WTO • Member countries can access on agriculture, manufacture and services • Expand the economic space

  12. Result was trade wars • Friction among trading nations • CASE: U.S.Japan Trade (on car) • Formation of EU • NAFTA(North American Free Trade Area)

  13. APEC (Asia Pacific Economic Co-operation) • 3. Sweeping structural changes in world: • Bretton Woods Twins- IMF and IBRD (International Bank For Reconstruction and Development )

  14. GATT - presided by American political and economy • Europe and Japan got enormous protection from US

  15. US dollar played an instrumental role in internationalization • 1950s and 1960s belonged to an era of international stability

  16. Loss of credibility of the U.S.dollar (1960s-1970s) • Cause: supply shock of oil crisis • Emergence of floating exchange rate system(1973)

  17. Changed role of the US. since 80s • No longer has the traditional role of an architect and arbiter

  18. Transition from fixed to floating exchange rates • Twin oil shock(1973 &1979) • Interest rate deregulation • Dismantling control on capital movement

  19. All Under Bretton Woods currency management (IMF system 1945 to 1973) • Exchange rates were more or less rigidly fixed with minor variations

  20. 4.Emergence of global village • Business and finance become global • International competition • Globalization through multinational firms

  21. Banking and commodity trade • Foreign Direct Investment • Interaction between domestic goods , money and labour market and global financial market

  22. 5.Diversity in economic life and role of information • Consumers –access to more than a million products • Global business manger has non working and non sleeping time • High quality information

  23. 6.Emergence of India key players in the fast growing Asian region: • Dramatic attitude towards productivity, cost quality, marketing skills etc