Introduction to International Finance.

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308FIN-INTERNATIONAL FINANCE
Unit No.1. Introduction to IF and IMS
Session No. 1
Presented By:
Dr. Mital Bhayani
Ph. D (Financial Management), MBA(Finance), NET and SET
(Management)
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
www.sanjivanimba.org.in

2. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
At the End of this Session you should be able to:
- Explain the meaning of International finance
- Appreciate the importance and goals of International finance
- Describe the nature of International finance
- Compare differences between domestic finance and
international finance
- Outline the scope of international finance
- Relate country’s economic wellbeing with globalization.
Session Learning Outcome

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Introduction to International Finance
3
International
Finance
1. What?
(Meaning)
2. Why ?
(Importance)
3. How?
(Nature)
4. Where?
(Scope)

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Meaning of International Finance
What is International Finance?
 “International finance is a study of Monetary transactions
between two or more countries ”.
 “It Can also be referred as International macro-economics”.
What is International financial management?
 “Financial Management in international settings.”

5. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
“Optimally making Corporate finance decisions to achieve
given corporate objectives .”
Which finance Decisions? Which Objectives?
What is Financial Management?
Raising
Finance
Reporting
and analysis
Deployment
of Funds
Maximizing
Shareholders
Wealth!!!!!!

6. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
“Because we live in highly globalized and integrated economy.”
“ Because we want to deal with international business”.
“ Domestic financial markets are increasingly integrated
internationally.”
“ We need to ensure survival of firm”
“ Use of different currencies amongst the nations is a major
concern”
Why we need to study IF ?

7. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
“ The rates at which the currencies are exchanged are called as
exchange rates”
“ The exchange rates are set by variety of arrangements”
“These arrangements as well as exchange rates are subject to
change.”
When exchange rate changes it has impact on:
- Sales
- Costs
- Profits
- Asset and liability values

8. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
“Exchange rates movements are interrelated
with……..:”
- Interest rates
- Inflation rates
- Asset values.

9. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
“Its Complex in nature”
- Different currencies
- Different Exchange rate arrangements
- Interrelated macro economic variables
- Integrated but imperfect world economy
- Risks involved at both sides being global is a risk but being
local is riskier.
How is it ( Nature)

10. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
- Longer distance is involved
- Different currency involved
- Different rates of interest in different countries
- The existence of exchange controls in many countries
- Different legal system in different countries
- Political systems may be different in different countries
- Different tax system in different countries
- Customs, convention and ethics differ from country to country
What is beyond domestic finance?

11. www.sanjivanimba.org.inwww.sanjivanimba.org.inDept. of MBA, Sanjivani COE, Kopargaon
• Foreign exchange risk ( Measurement and management)
- Forecasting exchange rates
- Analyzing its impact
- Measuring its risk and designing strategies to manage it
• Political risk
• Market imperfections
• Expanded opportunity sets
Scope of IF

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What we have to do is…….Consider
“ How International events may affect firm and what
steps can be taken to exploit positive
developments, and insulate the firm from harmful
ones”.
Conclusion

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Thank You!!