This document discusses the key differences between domestic finance and international finance. Domestic finance deals with financial transactions within one country and is not exposed to foreign exchange or political risks, while international finance involves cross-border transactions and is exposed to those additional risks. International finance also operates across varied economic, political, cultural, and tax environments. It has a wider scope and availability of investment portfolios compared to domestic finance.

1. Vishweswarsastry
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2. 1.Varied economic systems.
2.Tariff and non-tariff barriers.
3.Political risks.
4.Environmental safeguards.
5.Dumping.
6.Cultural differnces.
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3. 7.Languages differences
8.Intellectual property rights.
9.Cyber crimes.
10.Transfer pricing.
11.International taxation.
12.Economic and currency crisis.
13.Interest Rates.
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4. 14.Foreign exchange Risk.
15.Cold War.
16.International Business cycle.
17.Operational Risks.
18.Global Terrorism.
19.International cash management.
20.Credit worthiness.
21.Methods of payment.
22.Foreign exchange markets.
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5. INTERNATIONAL
DOMESTIC FINANCE FINANCE
 It is not exposed to
 International finance is
foreign exchange risk related to cross border
and political risks . transactions and exposed
to foreign exchange and
 It is subject to market political risks.
imperfections of one  It is very much subject to
country. market imperfections
because MNC ‘s should
operate in different
economies.
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6. DOMESTIC FINANCE INTERNATIONAL
FINANCE
 The availability of  The availability of
portfolio for investment
portfolios for investment
is limited.
is wide and large across
the nations in the world.
 It has no scope for  The MNC’s venture into
access to global the arena of global
markets. markets and thereby
benefit from an expanded
business.
 It is limited in scope.  It has wider scope.
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7.  Money acts as a medium of exchange both in domestic
and international markets as well.
 FE market is a market for converting the currency of
one country in to that of another.
 Without FE market, the international trade and
investment on the scale that we see today would be
impossible and countries would have to resort for
barter.
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8. 1. Exchange rate risk and its management
2. Foreign exchange market
3. Exchange rate determination and forecasting
4. MNC`s investment decision
5. International working capital management
6. International accounting and taxation
7. International financing decision
8. Macro economic analysis- b/p & external debt
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9.  Domestic FM is concerned with raising and utilizing of funds for projects
with positive NPV. The company wants to minimize the cost of capital
and maximize the ROI
 MNC operates in different economic, political, cultural, and tax
environments.
 They operate in various product factor markets
 They trade in large number of currencies other than home currency-
assets-liabilities-receivables and payables in different currencies.
 They have easy access to domestic and international capital markets and
access to different markets and instruments
 They are exposed to foreign exchange and political risks in addition to
interest rate and credit risks.
 Investments can be made in different markets, instruments etc. and has
wider choices.
 So financial decisions are more complex than a purely domestic company.
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10. Foreign
Exchange Currency
market convertibility
Internatio
Internationa
nal IFM l financial
financial
systems
markets
BOP
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11. DOMESTIC FINANCIAL INTERNATIONAL
MGT FINANCIAL MGT
 Single currency  Multiple
 Financial instruments  Large number of
use is limited. futures,interest
 Unique economic and rates,swaps etc
legal systems.  Different economic and
legal systems.
 Single language or few  Language differences
are the core of the
difficulties.
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12. DOMESTIC FINANCIAL INTERNATIONAL
MGT FINANCIAL MGT
 Limited cultures and  Multicultural ,different
subcultures. values, ethics and code of
conduct.
 Different accounting
 Country specific standards and GAAP
accounting standards principles in different
and GAAP principles. countries .
 Multiple risks such as
 Risks are related to interest rate risks,currency
domestic country. risk,political risks etc.
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14. 1.Transfer funds from one nation currency to another.
2.Transfer of purchasing power is necessary.
3.Import of food items,petroleum
products,technology,life saving drugs from foreign
countries.
4.For availing services like
education,tourism,healthcare,insurance,banking,hospit
ality,telecommunication,entertainment.
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