Has international finance become an important part of the financial management of firmsHas international finance become an important part of the financial management of firms?Why?

5 Answers | Add Yours

michael-niagara's profile pic

Michael Ugulini | (Level 3) Educator

Posted on

Yes, international finance has become an important part of the financial management of firms, especially with increased globalization. Enterprises are operating in other countries and opening satellite offices in these countries. They invest in foreign markets, source raw materials from foreign markets, and recruit employees from other countries as well. Therefore, it is necessary for firms to understand the financial and investment apparatus of the nations in which they conduct business and investment activities.

In addition, firms engage in foreign exchange transactions, including hedging as mentioned in the above post. They also engage in futures contracts with suppliers from other nations. international finance is increasingly becoming a regular aspect of day-to-day business practice for any firm that conducts any business outside their national borders.

International Finance

 

Hedging with Futures

kplhardison's profile pic

Karen P.L. Hardison | College Teacher | eNotes Employee

Posted on

It has become important for a variety of reasons not the least of which is foreign investment being incorporated into the firm's investment portfolio. There are now many ways to invest internationally that didn't exist thirty years ago. Businesses have many more options for hedging or, conversely, increasing the growth potential (and risk potential) of their portfolios.

rrteacher's profile pic

rrteacher | College Teacher | (Level 2) Educator Emeritus

Posted on

Almost no major financial institutions are not involved in some capacity in international finance and investment. In particular, many banks hold a great deal of sovereign debt from nations around the world. According to the London newspaper the Independent, almost a quarter of Greek debt is held directly by commercial banks, some of which are in Greece itself, but others throughout Europe and the world. In addition, more than half is held by asset managers, which can include many different types of investors. So international finance is here to stay, though the risks in today's climate can be extreme. 

http://blogs.independent.co.uk/2011/10/17/who-is-holding-greek-debt/

readerofbooks's profile pic

readerofbooks | College Teacher | (Level 2) Educator Emeritus

Posted on

The answer is yes. The world in which we live is very much an international one. Think of what is happening in Greece and Spain and how it is affecting the markets in the United States. The reality is finance and banks are all inter-related in many ways. Also think about the changes in currencies and how all of this affect profits. In light of all these facts, finance firms are very aware of international issues.

yacel0762's profile pic

yacel0762 | (Level 1) Valedictorian

Posted on

The answer is yes. The world in which we live is very much an international one. Think of what is happening in Greece and Spain and how it is affecting the markets in the United States. The reality is finance and banks are all inter-related in many ways. Also think about the changes in currencies and how all of this affect profits. In light of all these facts, finance firms are very aware of international issues.

Please provide feedback.

I definitely agree that international finance is becoming increasingly important part of the financial management of firms.  More and more companies are becoming involved in the global marketplace, and because of that international trade and finance are becoming more and more relevant in terms of business practices.  Because of the involvement (i.e. trade, manufacturing, labor, etc.) with other countries it’s important that businesses understand the different laws, currencies, exchange rates, economic conditions, and banking payment systems of the different countries that they are becoming involved with.  Being involved with international finance requires a very thorough understanding of both domestic and foreign markets and economies.

 

We’ve answered 318,915 questions. We can answer yours, too.

Ask a question