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International Banking Facilities

to depend on representatives in the target country to make loan decisions rather than having employees from the home country relocate and try to make these strategic business choices (Mastrull 1).

Importance of International Banking Facilities

Once a company decides to and enter the international arena, there are distinct financing concern that need to be addressed. These concerns can be divided into the following categories: acquisition and investment of funds. The acquisition of funds is concerned with determining how financing is accomplished. This includes considering whether it is best for the company to generate funds from internal sources, or whether the company should seek external financing at the lowest possible cost. Most companies, whether multinational or domestic, settle on a combination of these two approaches. The investment decision focuses on how funds are put to use once they are obtained.

These issues become more complex when viewed from the perspective of a multinational organization. Internally generated funds, for example, may come from one of the multinational's wholly owned subsidiaries. While technically this is an internal source of funds, it can appear to be an external source when viewed from an accounting perspective, and loan repayments to internal corporate sources are a particular source of accounting complexities that increase as multinational firms proliferate.

Multinational finance managers also face risks and concerns that do not interest domestic financial managers (although in today's global marketplace, all companies should maintain a global perspective regardless of whether they are international or domestic in their own operations). These concerns can include exchange and inflation risks, different tax environments in different markets, currency controls, political risks, and tariff considerations.

Multinational companies also have a distinct advantage over domestic compa...

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International Banking Facilities. (1969, December 31). In LotsofEssays.com. Retrieved 11:32, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1696268.html