International Finance

International Finance is very advance area of finance and a MBA scholar must study of this. In international finance, we study international financing, international currency market and  rates, international  investment, international projects, capital inflow and outflow between two countries,  international financial system, effect of finance on international trade and trade deficits.

We can define international finance in very simple words,

 "International finance means to get and effective use of international funds"

Now, we explain all the important elements of study international finance

1. International Financing

There are lots of corporates who provide loans at international level. In these corporations, we can include international finance corporation (IFC), international bank for reconstruction and development. To calculate the rate of interest on international financing is not so easy. By solving following equation, we can calculate interest rate of foreign currency.

2. International Currency Market and Rates

In international finance, we also study international currency market and their rates. All these market shows current rate of Euro-dollar, Dollar-INR. Lots of investor buys and sell these currencies.

3. International Investment 

International investment is also called foreign direct investment (FDI). This investment may be in the form of equity share capital or participation in the foreign business assets for production or incorporating a wholly owned subsidiary in foreign country. 

4. International Projects 

There are many projects which can be started two or more country  with collaboration of each other. For example, Govt. of two developing countries contracted to increase the educational level. For this, they can invest money collectively for both countries' educational development.

5. Capital Inflow and Outflow between two countries

It is good research topic for international finance scholars. They study the capital inflow and outflow between two country. For example, the natural resources of developing countries are more than developed countries. Foreign companies brings small capital inflow in developing countries and carry big capital outflow in the form of our natural resources. This study is very important in international finance. Because, if we will do this study, we can study to misuse of our natural resources. 

6. International Financial System 

Like national financial system, international financial system operates under some rules and regulations. Both parties records each transactions in their accounts. Under this international financial system, they deal in financial instruments and shares .

7. Effect of International Finance on International Trade and Trade Deficit 

There is gap between import and sale of imported goods. If International financial organisation helps importers and exporters, then international trade may be boost.