The document discusses trade financing and its importance in facilitating international trade transactions. It describes several types of trade financing instruments that can help address financing needs for exporters and importers, including documentary credits, countertrade, factoring, and various types of pre-shipping and post-shipping financing. It also covers export credit insurance that can protect traders from commercial and political risks, and export credit guarantees that make it easier for exporters to access trade financing from banks. Governments can help develop their countries' trade by assisting with export financing and building efficient financial infrastructure to support international trade transactions.
This document discusses the role of financial intermediaries in lending and borrowing. It explains that in a world without transaction costs or information problems, there would be no need for intermediaries. However, intermediaries exist to reduce transaction costs, allow for portfolio diversification, gather and produce information, and address issues of asymmetric information like adverse selection and moral hazard. The evolution of financial intermediaries in the US is then reviewed, highlighting the impact of deregulation, technology, and the rise of institutional investors like pension funds and mutual funds.
5. Methods of Payment in International Trade/Export and Import FinanceCharu Rastogi
This presentation discusses methods of obtaining export and import finance such as Accounts Receivable Financing, Factoring (Cross-Border Factoring), Letters of Credit (L/C) Banker’s Acceptance (BA), Working Capital Financing, Medium-Term Capital Goods, Financing (Forfaiting) and Countertrade. It also discusses methods of payment of international trade; Cash in Advance, Letters of Credit, Documentary Collections and Open Account followed by a comparative study of different methods. Furthermore, types of letter of credit and procedure of working of a letter of credit are also discussed.
This document provides information on factoring and forfaiting. It defines factoring as the purchase of accounts receivables by a factoring company, which provides financing, debt collection services, and protects against bad debts. Forfaiting involves the outright sale of receivables to a forfaiter at a discounted price without recourse to the seller. The key differences between the two are that factoring is for ongoing arrangements, provides various services, and has no minimum transaction size, while forfaiting is for single transactions over $250k and only provides financing without recourse.
This document provides an overview of different methods of pre-shipment and post-shipment financing available to exporters in India. It discusses packing credit in domestic currency, pre-shipment credit in foreign currency, and various types of post-shipment financing such as export bills purchased/discounted, advance against undrawn balance, and advance against claims of duty drawback. The objectives and procedures for availing each type of export financing are explained in detail.
Securitization involves issuing marketable securities backed by expected cash flows from assets like loans. In a typical securitization process, an originator sells assets like loans to a special purpose vehicle (SPV). The SPV issues securities to investors backed by the cash flows from the underlying assets. Various parties are involved including originators, obligors, collection agents, credit enhancers, arrangers, and rating agencies. Securitization provides benefits like more efficient financing, improved balance sheets, and better risk management for originators. Mortgage loans and other predictable cash flow assets can be securitized. A robust financial infrastructure is required to support successful securitization.
Commercial banks are the largest financial institutions in terms of assets. They accept deposits and make loans. Their major assets are loans and investment securities, while deposits are their major liabilities. Banks play essential roles in payment services, maturity transformation, and monetary policy transmission. They are regulated to protect these services from disruption. Large banks engage in both retail and wholesale banking globally, while community banks focus on local retail banking. The number of banks has declined due to mergers and acquisitions.
The document provides an overview of various fund based financial services. It discusses topics like leasing, hire purchase, factoring, venture capital, insurance, mutual funds and housing finance. For each topic, it provides definitions, key aspects, types and mechanisms. The summary is as follows:
The document defines and compares various fund based financial services like leasing, hire purchase, factoring and their mechanisms. It also discusses venture capital process, insurance types and regulation in India. Different mutual fund schemes and housing finance products are outlined. Key intermediaries and regulations for different financial sectors are highlighted.
This document discusses various types of financial services including leasing, hire purchase, and venture capital. It provides details on:
- The process of leasing, including the steps and types (finance lease, operating lease, sale and leaseback).
- How hire purchase works, including terms, process, and features.
- The meaning of venture capital, how it provides funding to startups and small businesses, and characteristics like long time horizon and equity participation.
- The development of venture capital in India, including the first VCFs established and rules/regulations from SEBI and the Indian Venture Capital and Private Equity Association.
This document discusses the role of financial intermediaries in lending and borrowing. It explains that in a world without transaction costs or information problems, there would be no need for intermediaries. However, intermediaries exist to reduce transaction costs, allow for portfolio diversification, gather and produce information, and address issues of asymmetric information like adverse selection and moral hazard. The evolution of financial intermediaries in the US is then reviewed, highlighting the impact of deregulation, technology, and the rise of institutional investors like pension funds and mutual funds.
5. Methods of Payment in International Trade/Export and Import FinanceCharu Rastogi
This presentation discusses methods of obtaining export and import finance such as Accounts Receivable Financing, Factoring (Cross-Border Factoring), Letters of Credit (L/C) Banker’s Acceptance (BA), Working Capital Financing, Medium-Term Capital Goods, Financing (Forfaiting) and Countertrade. It also discusses methods of payment of international trade; Cash in Advance, Letters of Credit, Documentary Collections and Open Account followed by a comparative study of different methods. Furthermore, types of letter of credit and procedure of working of a letter of credit are also discussed.
This document provides information on factoring and forfaiting. It defines factoring as the purchase of accounts receivables by a factoring company, which provides financing, debt collection services, and protects against bad debts. Forfaiting involves the outright sale of receivables to a forfaiter at a discounted price without recourse to the seller. The key differences between the two are that factoring is for ongoing arrangements, provides various services, and has no minimum transaction size, while forfaiting is for single transactions over $250k and only provides financing without recourse.
This document provides an overview of different methods of pre-shipment and post-shipment financing available to exporters in India. It discusses packing credit in domestic currency, pre-shipment credit in foreign currency, and various types of post-shipment financing such as export bills purchased/discounted, advance against undrawn balance, and advance against claims of duty drawback. The objectives and procedures for availing each type of export financing are explained in detail.
Securitization involves issuing marketable securities backed by expected cash flows from assets like loans. In a typical securitization process, an originator sells assets like loans to a special purpose vehicle (SPV). The SPV issues securities to investors backed by the cash flows from the underlying assets. Various parties are involved including originators, obligors, collection agents, credit enhancers, arrangers, and rating agencies. Securitization provides benefits like more efficient financing, improved balance sheets, and better risk management for originators. Mortgage loans and other predictable cash flow assets can be securitized. A robust financial infrastructure is required to support successful securitization.
Commercial banks are the largest financial institutions in terms of assets. They accept deposits and make loans. Their major assets are loans and investment securities, while deposits are their major liabilities. Banks play essential roles in payment services, maturity transformation, and monetary policy transmission. They are regulated to protect these services from disruption. Large banks engage in both retail and wholesale banking globally, while community banks focus on local retail banking. The number of banks has declined due to mergers and acquisitions.
The document provides an overview of various fund based financial services. It discusses topics like leasing, hire purchase, factoring, venture capital, insurance, mutual funds and housing finance. For each topic, it provides definitions, key aspects, types and mechanisms. The summary is as follows:
The document defines and compares various fund based financial services like leasing, hire purchase, factoring and their mechanisms. It also discusses venture capital process, insurance types and regulation in India. Different mutual fund schemes and housing finance products are outlined. Key intermediaries and regulations for different financial sectors are highlighted.
This document discusses various types of financial services including leasing, hire purchase, and venture capital. It provides details on:
- The process of leasing, including the steps and types (finance lease, operating lease, sale and leaseback).
- How hire purchase works, including terms, process, and features.
- The meaning of venture capital, how it provides funding to startups and small businesses, and characteristics like long time horizon and equity participation.
- The development of venture capital in India, including the first VCFs established and rules/regulations from SEBI and the Indian Venture Capital and Private Equity Association.
The financial system channels funds from those with savings to those who need funds for investment. It improves economic efficiency by allocating capital to its most productive uses. Financial intermediaries like banks are the most important source of external financing as they reduce transaction costs and information problems in the markets. Regulation aims to increase transparency and stability in the system. Conflicts of interest can arise when institutions have multiple objectives, reducing market efficiency, so reforms separate risky activities from information services.
The document discusses financial assets, money, and the role they play in the financial system. It describes how the financial system allows savings to be transformed into investment by connecting those with loanable funds to borrowers. Financial assets are claims against income or wealth that are usually represented by certificates and related to lending. They are sought after for future returns and as a store of value. The financial system provides an essential channel for the creation and exchange of financial assets between savers and borrowers to acquire real assets and accelerate economic growth.
This document provides an overview of fund-based financial services. It discusses six main types of fund-based services: 1) leasing, 2) hire purchase, 3) consumer credit, 4) factoring, 5) venture capital financing, and 6) housing finance. For each type, it provides definitions, key features, and advantages. The overall purpose is to classify and explain different methods of providing structured financing that is secured or supported by company assets.
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
Investment Management - Financial Market and InstitutionsDr. John V. Padua
This document provides an overview of financial markets and institutions. It defines key terms like financial system, markets, institutions and regulations. It describes the main components and functions of the financial system including borrowing/lending, price determination and risk sharing. It also outlines the major types of financial institutions like commercial banks, investment funds, insurance companies and their risk-reducing roles. Finally, it discusses reasons for financial regulation including increasing information transparency and ensuring system stability.
Impact of financial intermediaries on economyNosheen Ameen
Financial intermediaries such as banks facilitate the flow of money between savers and borrowers. They pool funds from many depositors and use these funds to issue loans to borrowers, helping overcome mismatches in maturity needs. Intermediaries also reduce information asymmetry and transaction costs. By acting as intermediaries, banks are able to efficiently channel funds to productive uses in the economy.
This chapter introduces financial markets and institutions. It defines key terms like primary and secondary markets, as well as money and capital markets. It outlines the role of various financial institutions in channeling funds and the risks they face. It also discusses the regulation of financial institutions to prevent failures from causing economic harm. Globalization trends are noted, with international financial markets growing rapidly in recent decades. An appendix summarizes the failures that led to the 2007-2008 financial crisis and the major government responses.
This document provides an overview of financial institutions and markets. It begins with definitions of key terms like financial markets, debt/interest rates, stock markets, and foreign exchange markets. It then discusses causes of financial crises like banking crises, asset bubbles, international crises, and regulatory failures. The document concludes that financial markets have significant impacts on individuals, businesses, and the overall economy, so it is important to understand these systems and how monetary policy works.
This document provides an overview of financial markets and institutions. It defines financial markets as markets for trading financial assets like stocks and bonds. It describes the main roles of financial markets as facilitating financial intermediation, providing a payments system, and allowing risk management. The document also outlines different types of financial markets and securities traded on markets. It discusses the role of financial institutions in processing information, lowering transaction costs, and addressing market imperfections to serve borrowers and lenders. Finally, it notes trends in financial institutions like consolidation, increased competition, and global expansion.
The document discusses various types of financial services including banking services, mutual funds, insurance, credit rating agencies, housing finance, factoring services, and demat services. It provides details on the concepts, objectives, types and processes involved in these services. The key financial services covered are banking products and services like loans, credit/debit cards, ATMs; mutual funds advantages and types; insurance phases and agriculture insurance schemes; objectives and types of credit rating agencies and export finance; housing finance development in India; factoring and demat services procedures.
The document discusses financial services and activities. It defines financial services as mobilizing and allocating savings, and notes they are customer-oriented, intangible, require simultaneous performance by suppliers and consumers, and are people-intensive. Traditional financial activities include fund-based activities like underwriting and dealing in markets, as well as non-fund based fee-based services like managing capital issues, project advisory, and mergers/acquisitions guidance. Financial engineering involves designing innovative financial instruments and solutions.
This presentation explores financial products and services in detail. It discusses the Indian Financial System and its constituents. Financial products are classified as per the place of issue/trade; Banks, Money market, Capital market, Asset / Fund based, Fee based. It also reflects on ‘How financial products are managed’ in the course of an individual’s Financial Planning Process.
This document provides an overview of financial markets and institutions. It discusses the role and functions of financial markets in facilitating the transfer of funds from surplus units to deficit units. It also describes different types of financial markets, securities traded in these markets such as money market securities, bonds, stocks and derivatives. Finally, it examines the roles of various financial institutions like commercial banks, savings institutions, mutual funds, securities firms, insurance companies and pension funds in financial markets. It also discusses competition and consolidation trends in the financial industry.
Japanese firms rely more heavily on bank financing and internal cash flows, while U.S. firms rely more on external financing through public debt and equity markets. This difference stems from Japan's main bank system where long-term relationships between firms and banks facilitate internal financing, compared to the U.S. where arm's-length capital markets play a larger role in corporate financing. As financial systems globalize, the differences in financing practices between countries have narrowed to some degree.
Fabozzi, F. J., Modigliani, F., Jones, F. J., & Ferri, M. Foundations of financial markets and institutions. Delhi: Dorling Kindersley (India) Pvt. Ltd.
Overview of financial assets: concept of financial assets, debt versus equity instruments, the price of financial assets and risk, financial assets versus tangible assets, the role of financial assets; Financial markets: concepts and role of financial markets, classification of financial markets, market participants, globalization of financial markets, classification of global financial markets, motivation for foreign market and Euromarkets; The role of the government in financial markets: justification for regulation, forms of regulation; and Financial innovation: categorization of financial innovations, and motivation for financial innovation.
This document defines and categorizes different types of financial intermediaries. It discusses insurance companies, mutual funds, non-banking finance companies, investment brokers, investment bankers, escrow companies, pension funds, and collective investment schemes. The main advantages of using financial intermediaries are that they help reduce costs compared to direct lending/borrowing, and help reconcile the conflicting needs of lenders and borrowers to prevent market failure. Financial intermediaries play a vital role in bringing together those with surplus funds to lend and those with shortage of funds to borrow.
The document discusses various sources of finance available to companies. It covers internal sources such as retained earnings and depreciation reserves, as well as external sources from banks, financial institutions, bonds and private lenders. Short-term financing is usually for less than one year and used for current assets, while long-term financing is for over 10 years such as owner's capital. Trade credit is a common short-term source where suppliers provide credit to customers in the normal course of business through open accounts, promissory notes or trade acceptances. The key advantages of trade credit are easy availability, informality and flexibility, while disadvantages include shorter repayment periods and potential loss of cash discounts.
Overseas Indians represent a vast pool of potential investors, entrepreneurs, and corporate leaders whose skills and expertise can contribute to India's rapid economic growth. The document discusses the Financial Services Division of the Indian government, which seeks to facilitate partnerships between overseas Indians and Indian businesses to promote investment and growth. The division aims to ease business operations in India, provide advisory services, and catalyze partnerships. It establishes frameworks to smooth the investment process and works with organizations like Overseas Indian Facilitation Centre to provide resources and guidance to overseas investors.
This document discusses forecasting and risk analysis in supply chain management. It introduces the concept of demand amplification, where small changes in consumer demand can result in large swings in orders and inventory levels throughout the supply chain. Advanced forecasting methods using autoregressive models and generalized autoregressive conditional heteroskedasticity (GARCH) are explored as a way to help predict oscillating demand and mitigate the risks of demand amplification. Preliminary simulation results using a GARCH model in a beer game supply chain simulation are presented, though the document notes the results may be limited by current structural and data availability constraints.
This document discusses India's perspective on the Agreement on Technical Barriers to Trade (TBT Agreement). It provides an overview of the objectives of the WTO, the main technical barriers addressed in WTO agreements, and the key provisions and requirements of the TBT Agreement regarding standards, technical regulations, and conformity assessment procedures. It also discusses India's role as an enquiry point, examining TBT notifications to ensure measures are not overly trade restrictive.
The financial system channels funds from those with savings to those who need funds for investment. It improves economic efficiency by allocating capital to its most productive uses. Financial intermediaries like banks are the most important source of external financing as they reduce transaction costs and information problems in the markets. Regulation aims to increase transparency and stability in the system. Conflicts of interest can arise when institutions have multiple objectives, reducing market efficiency, so reforms separate risky activities from information services.
The document discusses financial assets, money, and the role they play in the financial system. It describes how the financial system allows savings to be transformed into investment by connecting those with loanable funds to borrowers. Financial assets are claims against income or wealth that are usually represented by certificates and related to lending. They are sought after for future returns and as a store of value. The financial system provides an essential channel for the creation and exchange of financial assets between savers and borrowers to acquire real assets and accelerate economic growth.
This document provides an overview of fund-based financial services. It discusses six main types of fund-based services: 1) leasing, 2) hire purchase, 3) consumer credit, 4) factoring, 5) venture capital financing, and 6) housing finance. For each type, it provides definitions, key features, and advantages. The overall purpose is to classify and explain different methods of providing structured financing that is secured or supported by company assets.
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
Investment Management - Financial Market and InstitutionsDr. John V. Padua
This document provides an overview of financial markets and institutions. It defines key terms like financial system, markets, institutions and regulations. It describes the main components and functions of the financial system including borrowing/lending, price determination and risk sharing. It also outlines the major types of financial institutions like commercial banks, investment funds, insurance companies and their risk-reducing roles. Finally, it discusses reasons for financial regulation including increasing information transparency and ensuring system stability.
Impact of financial intermediaries on economyNosheen Ameen
Financial intermediaries such as banks facilitate the flow of money between savers and borrowers. They pool funds from many depositors and use these funds to issue loans to borrowers, helping overcome mismatches in maturity needs. Intermediaries also reduce information asymmetry and transaction costs. By acting as intermediaries, banks are able to efficiently channel funds to productive uses in the economy.
This chapter introduces financial markets and institutions. It defines key terms like primary and secondary markets, as well as money and capital markets. It outlines the role of various financial institutions in channeling funds and the risks they face. It also discusses the regulation of financial institutions to prevent failures from causing economic harm. Globalization trends are noted, with international financial markets growing rapidly in recent decades. An appendix summarizes the failures that led to the 2007-2008 financial crisis and the major government responses.
This document provides an overview of financial institutions and markets. It begins with definitions of key terms like financial markets, debt/interest rates, stock markets, and foreign exchange markets. It then discusses causes of financial crises like banking crises, asset bubbles, international crises, and regulatory failures. The document concludes that financial markets have significant impacts on individuals, businesses, and the overall economy, so it is important to understand these systems and how monetary policy works.
This document provides an overview of financial markets and institutions. It defines financial markets as markets for trading financial assets like stocks and bonds. It describes the main roles of financial markets as facilitating financial intermediation, providing a payments system, and allowing risk management. The document also outlines different types of financial markets and securities traded on markets. It discusses the role of financial institutions in processing information, lowering transaction costs, and addressing market imperfections to serve borrowers and lenders. Finally, it notes trends in financial institutions like consolidation, increased competition, and global expansion.
The document discusses various types of financial services including banking services, mutual funds, insurance, credit rating agencies, housing finance, factoring services, and demat services. It provides details on the concepts, objectives, types and processes involved in these services. The key financial services covered are banking products and services like loans, credit/debit cards, ATMs; mutual funds advantages and types; insurance phases and agriculture insurance schemes; objectives and types of credit rating agencies and export finance; housing finance development in India; factoring and demat services procedures.
The document discusses financial services and activities. It defines financial services as mobilizing and allocating savings, and notes they are customer-oriented, intangible, require simultaneous performance by suppliers and consumers, and are people-intensive. Traditional financial activities include fund-based activities like underwriting and dealing in markets, as well as non-fund based fee-based services like managing capital issues, project advisory, and mergers/acquisitions guidance. Financial engineering involves designing innovative financial instruments and solutions.
This presentation explores financial products and services in detail. It discusses the Indian Financial System and its constituents. Financial products are classified as per the place of issue/trade; Banks, Money market, Capital market, Asset / Fund based, Fee based. It also reflects on ‘How financial products are managed’ in the course of an individual’s Financial Planning Process.
This document provides an overview of financial markets and institutions. It discusses the role and functions of financial markets in facilitating the transfer of funds from surplus units to deficit units. It also describes different types of financial markets, securities traded in these markets such as money market securities, bonds, stocks and derivatives. Finally, it examines the roles of various financial institutions like commercial banks, savings institutions, mutual funds, securities firms, insurance companies and pension funds in financial markets. It also discusses competition and consolidation trends in the financial industry.
Japanese firms rely more heavily on bank financing and internal cash flows, while U.S. firms rely more on external financing through public debt and equity markets. This difference stems from Japan's main bank system where long-term relationships between firms and banks facilitate internal financing, compared to the U.S. where arm's-length capital markets play a larger role in corporate financing. As financial systems globalize, the differences in financing practices between countries have narrowed to some degree.
Fabozzi, F. J., Modigliani, F., Jones, F. J., & Ferri, M. Foundations of financial markets and institutions. Delhi: Dorling Kindersley (India) Pvt. Ltd.
Overview of financial assets: concept of financial assets, debt versus equity instruments, the price of financial assets and risk, financial assets versus tangible assets, the role of financial assets; Financial markets: concepts and role of financial markets, classification of financial markets, market participants, globalization of financial markets, classification of global financial markets, motivation for foreign market and Euromarkets; The role of the government in financial markets: justification for regulation, forms of regulation; and Financial innovation: categorization of financial innovations, and motivation for financial innovation.
This document defines and categorizes different types of financial intermediaries. It discusses insurance companies, mutual funds, non-banking finance companies, investment brokers, investment bankers, escrow companies, pension funds, and collective investment schemes. The main advantages of using financial intermediaries are that they help reduce costs compared to direct lending/borrowing, and help reconcile the conflicting needs of lenders and borrowers to prevent market failure. Financial intermediaries play a vital role in bringing together those with surplus funds to lend and those with shortage of funds to borrow.
The document discusses various sources of finance available to companies. It covers internal sources such as retained earnings and depreciation reserves, as well as external sources from banks, financial institutions, bonds and private lenders. Short-term financing is usually for less than one year and used for current assets, while long-term financing is for over 10 years such as owner's capital. Trade credit is a common short-term source where suppliers provide credit to customers in the normal course of business through open accounts, promissory notes or trade acceptances. The key advantages of trade credit are easy availability, informality and flexibility, while disadvantages include shorter repayment periods and potential loss of cash discounts.
Overseas Indians represent a vast pool of potential investors, entrepreneurs, and corporate leaders whose skills and expertise can contribute to India's rapid economic growth. The document discusses the Financial Services Division of the Indian government, which seeks to facilitate partnerships between overseas Indians and Indian businesses to promote investment and growth. The division aims to ease business operations in India, provide advisory services, and catalyze partnerships. It establishes frameworks to smooth the investment process and works with organizations like Overseas Indian Facilitation Centre to provide resources and guidance to overseas investors.
This document discusses forecasting and risk analysis in supply chain management. It introduces the concept of demand amplification, where small changes in consumer demand can result in large swings in orders and inventory levels throughout the supply chain. Advanced forecasting methods using autoregressive models and generalized autoregressive conditional heteroskedasticity (GARCH) are explored as a way to help predict oscillating demand and mitigate the risks of demand amplification. Preliminary simulation results using a GARCH model in a beer game supply chain simulation are presented, though the document notes the results may be limited by current structural and data availability constraints.
This document discusses India's perspective on the Agreement on Technical Barriers to Trade (TBT Agreement). It provides an overview of the objectives of the WTO, the main technical barriers addressed in WTO agreements, and the key provisions and requirements of the TBT Agreement regarding standards, technical regulations, and conformity assessment procedures. It also discusses India's role as an enquiry point, examining TBT notifications to ensure measures are not overly trade restrictive.
This document discusses research on online real estate consumer behavior conducted by comScore. It finds that 67 million people in the US are actively engaged in online real estate activities like buying, selling, renting, or financing. These online real estate consumers can be segmented into four main groups: Passionates (6%), who are highly engaged; Conventionals (14%), who rely on guidance; Actives (19%), who actively research online; and Future Prospects (61%), who are just looking now. The document provides details on the characteristics, behaviors, and best marketing approaches for each segment.
This document discusses research design and the differences between descriptive and explanatory research. Descriptive research aims to describe what is happening, while explanatory research aims to explain why something is happening. Good description is important and can provoke explanatory research questions by identifying social phenomena that need explanation. However, description can also be unfocused. Explanatory research develops causal explanations, but causation must be inferred and is not the same as prediction or correlation. Causal relationships in the social sciences are generally probabilistic rather than deterministic. The purpose of research design is to avoid making invalid causal inferences.
The document provides sample questions and answers related to the foreign exchange market. It defines the market and discusses the differences between the retail/client market and wholesale/interbank market. It also identifies the main participants in the foreign exchange market as international banks, bank customers, non-bank dealers, FX brokers, and central banks. Several questions are then presented related to topics like currency trading, forward markets, arbitrage opportunities, and examples of currency transactions.
This document provides an overview of the process of licensing intellectual property from universities to industry. It discusses:
1) The typical technology transfer process where a university evaluates an invention, patents it if promising, and licenses it to interested companies.
2) Ways companies can find and access university technologies, such as through personal contacts with researchers or patent searches.
3) Potential issues in university technology transfer, including early-stage research, conflicts over secrecy, and financial concerns for small companies.
The document discusses techniques for managing risk in international business. It outlines three steps: 1) identify individual risks, 2) assess risk magnitudes and exposures, and 3) incorporate risk assessments into decision making. It then introduces political risk and tools for financial decision making. A new framework is described that overcomes shortcomings of traditional techniques by using market data and compatible parameters with modern portfolio theory. The framework generates new decision making parameters by establishing accounting disciplines and linking income/expenditures. It assesses country-specific financial risk and provides examples of new parameters like risk premiums. Performance of international portfolios from 1982-1991 is analyzed for money markets, bonds, and equities.
This document introduces various trade finance instruments and export credit options. It discusses pre-shipping finance that exporters require to produce goods for export before receiving payment. It also explains importers' need for post-shipping finance to purchase overseas goods and sell domestically before paying. The document outlines common trade finance instruments like documentary credits, countertrade, factoring, and pre-shipping and post-shipping finance. It also discusses export credit insurance and guarantees that can protect traders from commercial and political risks in international trade transactions.
International Transportation and Trade Part 8.pptxSheldon Byron
This document provides information about various topics related to international trade finance, including:
- Important course dates for assignments, midterm, and final exam.
- Terminal learning objectives such as exploring finance alternatives, pre-shipment finance, supplier credits, and international money markets.
- Descriptions of different types of trade finance like pre-shipment finance, working capital insurance/guarantees, supplier credits, and short-term supplier credits. Key aspects of each like purpose, advantages, types, and credit application processes are outlined.
The project report provides an overview of trade finance. It defines trade finance and discusses various tools used in trade finance like letters of credit, bonds and guarantees, invoice discounting and factoring, and supply chain finance. It also outlines some common risks in international trade like counterparty risk, country risk, and FX risk. Finally, it discusses some key trade finance products available in India such as term loans, working capital limits, letters of credit, invoice discounting/factoring and export credit.
International Contracting And Import Finance 1anshiiii
The document discusses various methods of payment in international trade contracts including cash payment, documentary collection, letter of credit, open account, and consignment. It describes key terms like advance payment, documentary collection, letter of credit, open account, and shipment on consignment. Modes of payment like supplier's credit and buyer's credit are also covered along with the requirement for working capital in international trade finance.
FIN 6303, International Finance 1 Course Learning .docxdurantheseldine
FIN 6303, International Finance 1
Course Learning Outcomes for Unit VIII
Upon completion of this unit, students should be able to:
6. Prescribe international short-term cash management investments that maximize firm value.
6.1 Examine methods for financing international trade.
6.2 Evaluate short-term financing options available to multinational companies.
Course/Unit
Learning Outcomes
Learning Activity
6.1
Unit Lesson
Chapter 19
Video: The Big Ideas of Trade
Unit VIII Project
6.2
Unit Lesson
Chapter 20
Article: "Corporate Financing and Macroeconomic Volatility in the European
Union"
Unit VIII Project
Required Unit Resources
Chapter 19: Financing International Trade
Chapter 20: Short-Term Financing
In order to access the following resources, click the links below.
Marginal Revolution University. (2015, February 25). The big ideas of trade [Video]. Cielo24.
https://c24.page/p9szkkqcuaurgtm4rtrzavxqtr
Mullineux, A., Murinde, V., & Sensarma, R. (2011). Corporate financing and macroeconomic volatility in the
European Union. International Economics and Economic Policy, 8(1), 79–92.
https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc
t=true&db=bsu&AN=59929554&site=ehost-live&scope=site
Unit Lesson
Methods of Payment
Increased world economic globalization has also increased the importance of global trade activities. It is
important that financial managers understand the methods available to ensure international trade product
delivery and payment. This is because of the risk of nonpayment or lack of product shipment involved in
transactions that involve importers and exporters. There are several payment methods available to help
facilitate international trade. These include prepayment, letters of credit, drafts, consignment, and open
accounts.
Using the prepayment method, the exporter does not ship the product until payment is received. This is
typically done using a wire transfer from bank to bank. Companies involved in international trade can use the
international electronic payment system to make electronic payments using an intermediary bank. This
method protects the exporter and is generally used for first-time transactions when trust is being established.
UNIT VIII STUDY GUIDE
Short-Term Asset and
Liability Management
FIN 6303, International Finance 2
UNIT x STUDY GUIDE
Title
This is not ideal; however, for importers that may fear the exporter will not ship the product, this may be
preferred.
The letter of credit provides assurance that the importer will make payment once they have proof that the
product has been shipped. The letter comes from the importer’s bank, which provides the exporter
reassurance because they feel they can trust the bank. Shipping documents are sent from the exporter’s
bank, which authenticates the product has been shipped. The importer pays the exporter once the.
This document provides an overview of trade finance and pre-shipment trade finance. It discusses the importance of trade finance in facilitating international trade by providing working capital loans and payment terms. It outlines the key types of pre-shipment financing including packing credit and advances against receivables. Requirements for obtaining packing credit include having an importer-exporter code, not being on the RBI caution list, and having necessary licenses and quotas if applicable. Documentation needed includes an application, purchase order, licenses if needed, and information about the buyer and goods.
The document provides an introduction to exports and export finance in India. It discusses the importance of exports for the Indian economy and the role of export finance. Export finance can be categorized into pre-shipment finance, which is working capital provided before goods are shipped, and post-shipment finance after shipment until payment is received. Some common forms of pre-shipment finance include cash credit, advance against hypothecation of goods, and advance against a letter of credit. Post-shipment finance allows exporters to negotiate bills of exchange and receive advances on exported goods. Specific schemes discussed include packing credit, foreign currency pre-shipment credit, and deferred credit for capital goods.
Factoring and forfeiting are mechanisms for financing exports. Factoring involves purchasing a company's accounts receivables to provide working capital, while forfeiting involves discounting export bills or promissory notes without recourse to the exporter. There are benefits to both exporters and importers such as improved cash flow, risk mitigation, and access to longer term financing. The key differences are that factoring is for ongoing domestic or export sales while forfeiting is for single export transactions backed by letters of credit or guarantees.
Forfaiting is a method of trade finance that allows exporters to sell their medium-term foreign accounts receivable at a discount on a non-recourse basis to specialized finance firms called forfaiters. This eliminates the risk of non-payment for the exporter once goods have been delivered. It is suitable for exports of capital goods, commodities, and large projects with credit terms of 180 days to seven years. While it has a higher cost than commercial loans, forfaiting eliminates risk for exporters and allows them to offer medium-term financing in higher risk markets. Exporters work with forfaiters to structure deals and deliver goods, then the forfaiter collects payments from importers and assumes
Chapter20 International Finance ManagementPiyush Gaur
This document provides sample answers and solutions to end-of-chapter questions and problems about international trade finance. It discusses key concepts like letters of credit, time drafts, bills of lading, banker's acceptances, and different types of countertrade transactions. The document aims to help students understand the basic documents and processes involved in conducting international trade and different payment options for exporters.
Trade finance is used to mitigate risks in international trade transactions. It exists to reduce payment risk, country risk, and corporate risk. Payment risk is the risk that an exporter will not be paid in full or on time. Country risk refers to risks associated with doing business in a foreign country, such as exchange rate and political risks. Corporate risk relates to the creditworthiness and payment history of the importing/exporting company. Common trade finance tools include letters of credit, documentary collections, open accounts, trade loans, and factoring. Import financing provides credit to importers, while export financing supports exporters. Common import finance types are usance letters of credit, bank guarantees, and invoice financing. Export finance occurs both before and
This document discusses export financing provided by banks. It explains that banks provide both pre-shipment and post-shipment financing to exporters. Pre-shipment financing is working capital provided before goods are shipped, for activities like procuring raw materials. Post-shipment financing bridges the time between shipment and receipt of payment from importers. The document outlines various types of pre-shipment financing like packing credit and advances against letters of credit. It also discusses eligibility criteria, margin requirements, repayment processes and incentives available to exporters in India.
What Do International Trade Finance Companies Offer The Indian Market.pdfsophiaheartfield
There are several techniques to gauge business growth. One of the most obvious signs of success is the expansion into foreign markets. No matter what business it is, the objective is to grow by generating income and recognition.
Bill discounting allows banks to purchase bills or notes from customers before their maturity and credit the discounted value to the customer's account. It provides working capital financing to the customer. Factoring involves the ongoing assignment of accounts receivable invoices from a client to a factoring company, which provides working capital financing, invoice collection services, and accounts receivable management. Forfaiting involves the discounted purchase of medium-term bills of exchange associated with international trade transactions by a forfaiter, typically with tenors of 6 months to 10 years.
How import Finance works in daily life and its usessharjilbiki4
Letter of credit is a conditional guarantee issued by a bank on behalf of an importer to make payment to an exporter for shipped goods. It minimizes risks in international trade where parties may not know each other. Letters of credit provide protection to importers and exporters and are one of the most common and secure import financing methods. They involve an importer, exporter, issuing bank, advising bank, and sometimes a confirming or negotiating bank, with each party playing a defined role in the transaction process and documentation requirements.
The document provides an overview of exporting, importing, and countertrade. It discusses the promise and pitfalls of exporting, improving export performance, export strategy, export and import financing including letters of credit and bills of lading. It also covers export assistance programs, countertrade arrangements including barter, counterpurchase, offset, buyback, and switch trading.
This document provides an overview of factoring and forfaiting processes used in international trade finance. It discusses that factoring involves the sale of book debts or invoices by an exporter to a factor, who provides financing and collects payment. Forfaiting involves the purchase of export receivables by a financial intermediary without recourse to the exporter. The key differences are that factoring may involve credit risk transfer, while forfaiting is done on a non-recourse basis. Both tools help companies raise working capital by discounting outstanding receivables. The document outlines the various parties, documents, costs and applicable regulations for these financial services.
Export credit gurantee corporaton of india (ecgcRadhikaGupta215
The document provides information on the Export Credit Guarantee Corporation of India (ECGC). It discusses that ECGC was set up in 1957 to provide export credit insurance and trade services to Indian exporters. ECGC insures exporters against payment risks from foreign buyers. It offers various policies like standard policies for short-term exports, specific policies for deferred payment contracts and services, and financial guarantees to banks. ECGC aims to encourage Indian trade, assist exporters in managing credit risks, and facilitate bank financing to exporters. The document outlines the objectives, functions, types of risks covered and policies provided by ECGC.
The document discusses various types of financing options including venture capital. It provides details on factors like how venture capital works, the typical funding process, types of venture capital based on stage of business, and exit options. It also profiles several prominent venture capital firms active in India and some of the major startups they have funded.
This document provides an overview of factoring and forfaiting. It defines factoring as the financial transaction where a business sells its accounts receivable to a third party called a factor at a discount. Forfaiting refers to the financing of receivables related to international trade where the right to export receivables is purchased by a financial intermediary without recourse. The document outlines the key parties involved in factoring and forfaiting, the different types of factoring arrangements, the functions of a factor, and the information and documents required by a forfaiter.
This document summarizes a research paper about hardware-enhanced association rule mining using hashing and pipelining (HAPPI). The HAPPI architecture proposes three hardware modules: 1) a systolic array that compares candidate itemsets to a database to find frequent itemsets, 2) a trimming filter that determines item frequencies to eliminate infrequent items, and 3) a hash table that is used to filter unnecessary candidate itemsets. The HAPPI architecture aims to reduce the number of candidate itemsets and database items loaded into hardware to address bottlenecks in previous hardware approaches for association rule mining. Experimental results showed that HAPPI significantly outperforms previous hardware and software methods.
1. The document describes a proposed system called HAPPI (HAsh-based and PiPelIned) architecture for hardware-enhanced association rule mining. HAPPI aims to solve performance bottlenecks in existing Apriori-based hardware schemes by reducing the frequency of loading the database into hardware.
2. HAPPI includes three hardware modules - a systolic array to compare candidate itemsets with database items, a trimming filter to eliminate infrequent items, and a hash table to filter unnecessary candidate itemsets.
3. The proposed HAPPI system is intended to address limitations of existing Apriori-based approaches that involve repeatedly loading large candidate itemsets and databases into hardware.
The document discusses a facial recognition system based on locality preserving projections (LPP). It begins by explaining that existing facial recognition systems using PCA and LDA aim to preserve global structure but local structure is more important. It then proposes a system using LPP, which aims to preserve local manifold structure by modeling the image space as a nearest-neighbor graph. The system represents faces as "Laplacianfaces" in a low-dimensional subspace that preserves local structure for more accurate identification. It provides theoretical analysis showing how PCA, LDA and LPP can be derived from different graph models.
Facial recognition systems analyze facial images to identify individuals. They measure facial features to create a unique template for each face. Historically, early systems used neural networks to recognize aligned faces. More advanced techniques like eigenfaces, laplacianfaces, and locality preserving projections map faces into subspaces to analyze them. Facial recognition has improved accuracy in identifying faces with variations in expression. However, it has limitations as it only utilizes a subset of human facial nodal points and does not account for manifold structure or biometric characteristics. Future areas of development include 3D recognition and unobtrusive audio-video identification systems.
Worldwide market and trends for electronic manufacturing servicesStudsPlanet.com
New Venture Research Corporation is a market research and business development consultancy that has specialized in contract manufacturing and outsourcing for over 15 years. They produce widely quoted syndicated research on the electronics manufacturing services industry. The presentation summarizes trends in the worldwide electronics assembly market between 2007-2012, with the computer and communications segments growing the fastest. It also reviews growth in the EMS market by geographic region as well as direct labor costs and leading contract manufacturers in key regions like Mexico, Eastern Europe, and China. In conclusion, the author predicts continued strong growth in the EMS market, particularly in low-cost regions, over the next 5 years.
This document provides an executive summary of the world electronic industries from 2008 to 2013. It finds that while the electronics industry experienced a decline in 2009 due to the financial crisis, production of professional electronic equipment is expected to drive overall growth above average between 2008 and 2013. Specifically, industrial and medical electronics will contribute significantly to industry growth. Additionally, China is projected to outperform other regions in recovering from the economic downturn. The summary highlights innovation and integration across various applications as keys to the long-term prospects of the electronics industry.
The document summarizes Alfred Weber's locational theory model, known as the Weberian model or the least cost approach. The key points are:
1. The Weberian model explains the optimal location of industrial facilities using the locational triangle. Transportation is the most important element of the model.
2. Solving the Weber model involves three stages - finding the least transport cost location, adjusting for labor costs, and adjusting further for agglomeration economies.
3. Transportation cost is the primary factor in determining optimal location, according to the model. Labor costs and agglomeration economies are secondary adjustment factors.
Kluckhohn and Strodtbeck developed a model for analyzing and comparing cultures based on their underlying values and orientations. The model identifies six key dimensions along which cultures vary: humanity's relationship with nature, concepts of time, views of human activity, social relationships, basic human nature, and orientation towards space. These dimensions provide a framework for understanding differences in how cultures approach issues like social organization, time orientation, and human nature. While useful, the model is limited by its vagueness, difficulty of measurement, and lack of direct focus on business and management issues.
The document discusses Kluckhohn and Strodtbeck's model of cross-cultural value orientations, which identifies six basic dimensions that cultures vary along: relationship to nature, time orientation, activity orientation, relationships among people, human nature, and space/property. These dimensions influence a culture's values regarding important issues like work, family, and social relations. While insightful, Kluckhohn and Strodtbeck's framework has weaknesses like being vague, difficult to measure, and not directly addressing business and management concerns.
This document outlines a model mediation procedure and agreement for intellectual property disputes in the UK. It provides guidance for conducting a mediation, including procedures for exchanging information, conducting the mediation, reaching and formalizing any settlement agreement, ensuring confidentiality, and allocating costs. Key aspects include having representatives with full authority to settle, preparing concise case summaries and documents to share, maintaining confidentiality of mediation discussions, and jointly sharing mediation fees and expenses.
Trompenaars and Hampden-Turner identified seven cultural dimensions along which cultures can be classified based on their research on business executives. These seven dimensions are universalism versus particularism, communitarianism versus individualism, neutral versus emotional, diffuse versus specific cultures, achievement versus ascription, human-time relationship, and human-nature relationship. Their 1997 book "Riding The Waves of Culture" explores these seven value orientations between cultures.
Toyota built a new car factory in Burnaston, UK, creating over 3000 jobs. Burnaston was chosen as the site because it was a large, flat, greenfield site next to major roads with access to suppliers and a local workforce. The new factory had positive economic effects, including jobs, increased spending, and supplier companies moving to the area. However, it also increased traffic and destroyed greenfield land. While most benefits were local, there was a potential downside if it reduced sales or jobs elsewhere.
The International legal environment of businessStudsPlanet.com
The document discusses the international legal environment of business. It covers topics such as international law and agreements, business structures abroad, and dispute resolution. It also examines the international business environment, risks of international transactions, and origins and sources of international law. International business involves entities from multiple countries and issues around trade, capital, personnel across borders under different legal systems and government policies.
India's textile industry is one of the largest in the world, contributing 14% to industrial production and employing over 35 million people. It is the largest provider of employment after agriculture and earns 27% of India's total foreign exchange through textile exports. The industry has grown significantly since economic liberalization in 1991 and includes cotton, silk, wool, readymade garments, and hand-crafted textiles segments. It faces competition from countries like China but also has opportunities for growth in the domestic market and through trade agreements. The government is taking initiatives to support the industry through skills training programs and new textile parks.
This document discusses key concepts related to documentary sales and international transactions. It defines key terms like documentary sale, negotiability, bills of lading, and documentary draft. It explains the stages of a documentary transaction and how the risks are allocated between buyers and sellers under different trade terms like CIF. The document also summarizes several cases that illustrate how these concepts are applied, such as who is responsible if goods are stolen during transport depending on whether it is an FOB or CIF contract.
This document discusses various leadership roles and responsibilities. It begins by listing numerous roles of strategic leaders such as visionary, builder, acquirer, implementer, integrator, and motivator. It then provides more details on the roles of staying informed, promoting culture, adapting to change, exercising ethics, and making corrections. The document also discusses developing new capabilities through senior management intervention and cooperation. It outlines actions demonstrating social responsibility like family policies and community involvement. Finally, it discusses leading corrective adjustments through both reactive and proactive changes to strategy and alignment of activities.
The document provides information on various credit insurance products offered by ECGC (Export Credit Guarantee Corporation of India) to exporters and banks. It describes short-term and medium/long-term export credit insurance that protects against payment risks and lending risks. It also outlines domestic credit insurance, overseas investment insurance, and exchange fluctuation covers. Statistics on ECGC's growth over time and profiles of specific insurance policies are included.
This document discusses various methods for resolving international commercial and business disputes. It notes that international litigation can be complicated by differences in judicial systems and challenges enforcing judgments across borders. The International Court of Justice allows disputes between nations but not individuals. Arbitration and mediation provide alternatives where a neutral third party decides the outcome (arbitration) or makes non-binding suggestions to reach a settlement (mediation). Other options include negotiation, expert determination, and utilizing dispute resolution processes under international treaties like the World Trade Organization. Overall, the best approach is to prevent disputes through risk management and carefully drafting contracts.
This document provides an overview of India's foreign trade policy for 2009-2014. It discusses India's growing exports and trade share in recent years. It then outlines the economic crisis and declining exports. The policy aims to arrest this decline and achieve annual export growth targets. It describes various components of the policy including import/export controls, duty exemption schemes, and promotional measures. Stimulus measures by the government and RBI to boost exports are also summarized.
This document discusses various types of multinational enterprises (MNEs) and their international operations. It defines MNEs as firms that engage in foreign direct investment and own or control value-adding activities in more than one country. The document also discusses measures of internationalization like the transnationality index. Finally, it covers topics like developing country MNEs, small and medium enterprises, and "born global" firms that seek international operations from the start.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
This assessment plan proposal is to outline a structured approach to evaluati...
Trade finance
1. CHAPTER 8
AN INTRODUCTION TO TRADE FINANCE
The absence of an adequate trade finance
infrastructure is, in effect, equivalent to a barrier to
trade. Limited access to financing, high costs, and
lack of insurance or guarantees are likely to hinder
the trade and export potential of an economy, and
particularly that of small and medium sized
enterprises.
As explained in Chapter 1, trade facilitation aims at
reducing transaction cost and time by streamlining
trade procedures and processes. One of the most
important challenges for traders involved in a
transaction is to secure financing so that the
transaction may actually take place. The faster and
easier the process of financing an international
transaction, the more trade will be facilitated.
Traders require working capital (i.e., short-term
financing) to support their trading activities.
Exporters will usually require financing to process or
manufacture products for the export market before
receiving payment. Such financing is known as
pre-shipping finance. Conversely, importers will need
a line of credit to buy goods overseas and sell them
in the domestic market before paying for imports. In
most cases, foreign buyers expect to pay only when
goods arrive, or later still if possible, but certainly not
in advance. They prefer an open account, or at least
a delayed payment arrangement. Being able to offer
attractive payments term to buyers is often crucial in
getting a contract and requires access to financing for
exporters.
Therefore, governments whose economic growth
strategy involves trade development should provide
assistance and support in terms of export financing
and development of an efficient financial
infrastructure. There are many types of financial tools
and packages designed to facilitate the financing of
trade transactions. This Chapter will only introduce
three types, namely:
• Trade Financing Instruments;
• Export Credit Insurances; and
• Export Credit Guarantees
1. Trade Financing Instruments
The main types of trade financing instruments are as
follows:
a) Documentary Credit
This is the most common form of the commercial
letter of credit. The issuing bank will make payment,
either immediately or at a prescribed date, upon the
presentation of stipulated documents. These
documents will include shipping and insurance
documents, and commercial invoices. The
documentary credit arrangement offers an
internationally used method of attaining a
commercially acceptable undertaking by providing for
payment to be made against presentation of
documentation representing the goods, making
possible the transfer of title to those goods. A letter
of credit is a precise document whereby the importer’s
bank extends credit to the importer and assumes
responsibility in paying the exporter.
A common problem faced in emerging economies is
that many banks have inadequate capital and foreign
exchange, making their ability to back the
documentary credits questionable. Exporters may
require guarantees from their own local banks as an
additional source of security, but this may generate
significant additional costs as the banks may be
reluctant to assume the risks. Allowing internationally
reputable banks to operate in the country and offer
documentary credit is one way to effectively solve this
problem.
2. TRADE FACILITATION HANDBOOK FOR THE GREATER MEKONG SUBREGION
60 CHAPTER 8: AN INTRODUCTION TO TRADE FINANCE
b) Countertrade
As mentioned above, most emerging economies face
the problem of limited foreign exchange holdings.
One way to overcome this constraint is to promote
and encourage countertrade. Today’s modern counter
trade appears in so many forms that it is difficult to
devise a definition. It generally encompasses the idea
of subjecting the agreement to purchase goods or
services to an undertaking by the supplier to take on
a compensating obligation. The seller is required to
accept goods or other instruments of trade in partial
or whole payment for its products.
Some of the forms of counter trade include:
• Barter – This traditional type of
countertrade involving the exchange of
goods and services against other goods and
services of equivalent value, with no
monetary exchange between exporter and
importer.
• Counterpurchase – The exporter undertakes
to buy goods from the importer or from a
company nominated by the importer, or
agrees to arrange for the purchase by a third
party. The value of the counterpurchased
goods is an agreed percentage of the prices
of the goods originally exported.
• Buy-back – The exporter of heavy
equipment agrees to accept products
manufactured by the importer of the
equipment as payment.
c) Factoring
This involves the sale at a discount of accounts
receivable or other debt assets on a daily, weekly or
monthly basis in exchange for immediate cash. The
debt assets are sold by the exporter at a discount to a
factoring house, which will assume all commercial and
political risks of the account receivable. In the
absence of private sector players, governments can
facilitate the establishment of a state-owned factor;
or a joint venture set-up with several banks and
trading enterprises.
d) Pre-Shipping Financing
This is financing for the period prior to the shipment
of goods, to support pre-export activities like wages
and overhead costs. It is especially needed when
inputs for production must be imported. It also
provides additional working capital for the exporter.
Pre-shipment financing is especially important to
smaller enterprises because the international sales cycle
is usually longer than the domestic sales cycle.
Pre-shipment financing can take in the form of short-
term loans, overdrafts and cash credits.
e) Post-Shipping Financing
Financing for the period following shipment. The
ability to be competitive often depends on the trader’s
credit term offered to buyers. Post-shipment
financing ensures adequate liquidity until the
purchaser receives the products and the exporter
receives payment. Post-shipment financing is usually
short-term.
f) Buyer’s Credit
A financial arrangement whereby a financial
institution in the exporting country extends a loan
directly or indirectly to a foreign buyer to finance the
purchase of goods and services from the exporting
country. This arrangement enables the buyer to make
payments due to the supplier under the contract.
g) Supplier’s Credit
A financing arrangement under which an exporter
extends credit to the buyer in the importing country
to finance the buyer’s purchases.
2. Export Credit Insurance
In addition to financing issues, traders are also subject
to risks, which can be either commercial or political.
Commercial risk arises from factors like the
non-acceptance of goods by buyer, the failure of buyer
to pay debt, and the failure of foreign banks to
honour documentary credits. Political risk arises from
factors like war, riots and civil commotion, blockage
of foreign exchange transfers and currency
devaluation. Export credit insurance involves insuring
exporters against such risks. It is commonly used in
Europe, and increasing in importance in the United
States as well as in developing markets.
The types of export credit insurance used vary from
country to country and depends on traders’ perceived
needs. The most commonly used are as follows:
3. TRADE FACILITATION HANDBOOK FOR THE GREATER MEKONG SUBREGION
CHAPTER 8: AN INTRODUCTION TO TRADE FINANCE 61
• Short-term Export Credit Insurance –
Covers periods not more than 180 days.
Protection includes pre-shipment and
post-shipment risks, the former covering the
period between the awarding of contract
until shipment. Protection can also be
covered against commercial and political
risks.
• Medium and Long-term Export Credit
Insurance – Issued for credits extending
longer periods, medium-term (up to three
years) or longer. Protection provided for
financing exports of capital goods and
services.
• Investment Insurance – Insurance offered to
exporters investing in foreign countries.
• Exchange Rate Insurance – Covers losses as
a result of fluctuations in exchange rates
between exporters’ and importers’ national
currencies over a period of time.
The benefits of export credit insurance include:
• Ability of exporters to offer buyers
competitive payment terms.
• Protection against risks and financial costs
of non-payment.
• Access to working capital.
• Protection against losses from foreign
exchange fluctuations.
• Reduction of need for tangible security when
borrowing from banks.
Export credit insurance mitigates the financial impact
of the risk. There are specialized financial institutions
available that offer insurance cover, with premiums
dependent on the risk of the export markets and
export products.
3. Export Credit Guarantees
Export credit guarantees are instruments to safeguard
export-financing banks from losses that may occur
from providing funds to exporters. While export
credit insurance protects exporters, guarantees protect
banks offering the loans. They do not involve the
actual provision of funds, but the exporters’ access to
financing is facilitated.
An export credit guarantee is issued by a financial
institution, or a government agency, set up to
promote exports. Such guarantee allows exporters to
secure pre-shipment financing or post-shipment
financing from a banking institution more easily.
Even in situations where trade financing is
commercially available, companies without sufficient
track records may not be looked upon favourably by
banks. Therefore, the provision of financial
guarantees to the banking system for purveying export
credit is an important element in helping local
companies go into exporting. The agency providing
this service has to carefully assess the risk associated
in supporting the exporter as well as the buyer.
4. The Role of Governments in Trade
Financing
The role of government in trade financing is crucial
in emerging economies. In the presence of
underdeveloped financial and money markets, traders
have restricted access to financing. Governments can
either play a direct role like direct provision of trade
finance or credit guarantees; or indirectly by
facilitating the formation of trade financing
enterprises. Governments could also extend assistance
in seeking cheaper credit by offering or supporting
the following:
• Central Bank refinancing schemes;
• Specialized financing institutes like
Export-Import Banks or Factoring Houses;
• Export credit insurance agencies;
• Assistance from the Trade Promotion
Organisation; and
• Collaboration with Enterprise Development
Corporations (EDC) or State Trading
Enterprises (STE).
a) Central Bank Refinancing Schemes
Under this type of schemes, the Central Bank will
rediscount the commercial bills of exporters at
preferential rates. This will provide the cheap
post-shipment financing necessary for exporters to
quickly turn around funds for further export business.
Here, the government is subsidizing the cost of funds
that exporters have to pay if they rediscount their bills
with commercial banks.
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62 CHAPTER 8: AN INTRODUCTION TO TRADE FINANCE
In a similar scheme, government could also offer
factoring services at subsidized rates.
b) Export-Import Bank (EXIM Bank)
The Export-Import Bank (EXIM Bank) specifically
caters to the needs of exporters and importers and
those of investors in foreign markets. It offers various
services, including long-term direct loans to foreign
buyers for loans and equipment sales of sufficient
sizes.
Several countries, including developed nations, have
EXIM banks. For example, the United States EXIM
Bank was created in 1934 and established under its
present law in 1945. Its primary role is to aid in
financing US exports, and for medium-term
(181 days to 5 years) transactions, it co-operates with
US commercial banks by providing export credit
guarantees. In setting up the EXIM Bank, the US
recognized that job creation is a consequence of
exports. Its main customers are SMEs in the United
States.
c) Export Credit Insurance Agencies
Export credit insurance agencies act as bridges
between banks and exporters. In emerging economies
where the financial sector is yet to be developed,
governments often take over the role of the export
credit insurance agent. Governments traditionally
assume this role because they are deemed to be the
only institutions in a position to bear political risks.
Several countries in Asia and Africa have such an
organization. However, the viability of such an
organization depend on the volume of business and
income from insurance premium. In that context,
credit insurance policies vary according to the type
of exports. For example, short term policies on the
sale of raw materials on 180 days terms are covered
up to 95 per cent for commercial risk and 100 per
cent for political risk. Such trades are considered
relatively secure. Nonetheless, it is good practice to
get the exporter to bear a certain portion of the risk.
d) Support from Trade Promotion Organisations
(TPOs)
As explained earlier, banks are often reluctant to lend
to exporters because of their lack of knowledge about
the creditworthiness of the traders, and as a result may
raise interest to compensate for the risks taken. TPOs
are in a position to know the strengths and weaknesses
of the individual trading houses and exporters, and
could share information with financial institutions to
facilitate access to financial services.
TPOs are the government agencies that are most
directly involved with the trading community, often
supporting promising trading and exporting
enterprises. The support and assistance given by the
TPOs could act as a signal to banks as to which
companies are creditworthy companies. In addition,
TPOs could establish network of financial
institutions, identify their credit requirement, and
match trading enterprises and financial institutions
based on these requirements.
e) Export Development Corporation and State
Owned Enterprises
In most emerging economies, there are a few key
conglomerates with a diverse range of products,
substantial export capacity and sustainable financial
resources. They could be private sector export
development corporations (EDCs) or state-owned
enterprises (SOEs).
Governments could harness these enterprises as
mechanisms to assist other local firms, especially
SMEs, to export their products or import goods.
Unlike the SMEs, the EDCs and the SOEs have the
financial resources and trade expertise needed to
participate in trading activities. Smaller exporters
could sell their products to the EDCs and SOEs and
receive payment earlier than if they exported directly
by themselves. Small importers could also purchase
goods from the EDCs and SOEs, which have the
financial strength to bulk purchase from abroad.
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CHAPTER 8: AN INTRODUCTION TO TRADE FINANCE 63
5. Conclusion
This Chapter has explained the need for trade finance
and introduced some of the most common trade
finance tools and practices. A proactive role of
governments in trade finance may alleviate the lack
of trade finance in emerging GMS economies and
contribute to trade expansion and facilitation.
However, the best long-term solution in resolving the
constraints in trade financing is to encourage the
growth and development of a vibrant and competitive
financial system, comprising mainly private sector
players. This point is important as some of the
government-supported trade financing schemes may
Box 8.1 Trade Finance Trends in Asia
The recent economic slowdown is making the need for sound trade finance policies and strong financial
systems more acute. Many companies are trying to preserve cash by delaying payment and the number of
SMEs in emerging Asian economies with high credit risk is growing.
This is partly the result of a regional trend toward unsecured, open-account type transactions. Large
Western buyers are asking that their Asian suppliers sell goods on open-accounts terms, instead of using
guarantees like letters of credit (LCs). These buyers simply do not want to bear the extra cost of payment
guarantees and will source their goods from somewhere else if they are not given open-accounts. These
open-accounts allow the buyers to delay payments as needed, rising the need for credit for Asian companies
who choose to supply them.
The economic slowdown also has made many companies rethink their commitment to electronic trading
and payment systems. While these systems may cut significant costs out of the labor-intensive trade finance
process, they also make payment delays more difficult to justify.
Large Western buyers are not the only ones delaying payments. In fact, many companies prefer dealing
with these buyers than with the thinly capitalized buyers commonly found in many emerging Asian
economies, mainly because these large buyers remain relatively punctual and have very low credit risk
(i.e., even if they delay payment a little, they will pay).
With the internationalization of supply chains, a Hong-Kong, China based transformer manufacturer may
sell its products to Chinese buyers sub-contracted by Dell or IBM to manufacture PCs. The Chinese
sub-contractor may ask to buy from the manufacturer on open-account terms on the basis that payment
from Dell or IBM is a sure thing. This kind of arrangement increases the financial risk exposure of the
transformer manufacturer, and typically results in payment delays measured in weeks and sometime months.
Because LCs or factoring in China and many other countries in Asia are not yet commonly used or available,
Asian suppliers can often do very little to protect themselves in regional cross-border transaction, increasing
the cost of regional trade transactions relative to that of direct transactions with Western companies.
Source: Moiseiwitsch, J., CFO Asia, Trade Finance – Time Bandits, November 2001, http://www.cfoasia.com/archives/200111-03.htm
increasingly be challenged by competing countries as
unfair export subsidies under existing and future
WTO rules.
The role of the government and other parties involved
in trade finance will need to evolve along with the
country’s economy. Underlying the functions
provided by the different players is the need for a clear
and effective legal environment. The commercial
legal system must be transparent. Laws of property,
contract and arbitration must be clear. The
commercial legal environment must be integrated
with the financial infrastructure framework in order
for it to be effective.
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64 CHAPTER 8: AN INTRODUCTION TO TRADE FINANCE
6. For Further Reading...
• One illustration of government’s proactive role
in trade finance in Asia and the Pacific is the
creation by the Australian government of the
Export Finance and Insurance Corporation
(EFIC) in 1991. (http://www.efic.gov.au).
• A well-developed domestic financial system can
go a long way toward facilitating trade by
making trade financing easier. The issue of
mobilizing domestic finance for development is
addressed in the joint ESCAP-ADB report
available at: http://www.un.org/esa/ffd/escap-
rpt2001.pdf.
• The International Trade Center (ITC), a joint
initiative of UNCTAD and the WTO, is a
source of practical guides and manuals on
international trade finance issues (http://
www.intracen.org/tfs/docs/overview.htm).