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Chapter 18

Chapter 18. Financial Strategies: Financing and Currencies. Chapter Outline. Nonfinancial Institutions - Self Financing and Debt Financing - Equity Financing Financial Institutions Government Agencies. Chapter Outline. International Financial Institutions/Development Banks World Bank

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Chapter 18

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  1. Chapter 18 Financial Strategies: Financing and Currencies

  2. Chapter Outline • Nonfinancial Institutions - Self Financing and Debt Financing - Equity Financing • Financial Institutions • Government Agencies

  3. Chapter Outline • International Financial Institutions/Development Banks • World Bank • International Development Association (IDA) • International Finance Corporation (IFC) • Multilateral Investment Guarantee Agency (MIGA) • International Centre for Settlement of Investment Disputes (ICSID) • IMF (International Monetary Fund)

  4. Chapter Outline • Money • Foreign Exchange • Foreign Exchange Market • Foreign Exchange Rate - Currency Equilibrium - Effect of Devaluation

  5. Chapter Outline • Exchange-Rate Systems - Gold Standard - Par Value (Adjustable Peg) - Crawling Peg (Sliding or Gliding Parity) - Wide Band - Floating (Flexible) System • Official Classification of Exchange Rate Regimes • Evaluation of Floating Rates

  6. Chapter Outline • Financial Implications and Strategies - Early Warning Systems - Hedging - Leading and Lagging - Invoicing - Pass-Through Costs - Other Strategies

  7. Self Financing and Debt Financing • own capital • withholding of dividends • trade credit • joint venture partners • borrowing from affiliated firms and employee retirement fund • issuing commercial paper or bonds

  8. Equity Financing • Selling Stock • Venture Capital

  9. Financial Institutions • Factoring Houses • Forfaiting • Banks

  10. Government Agencies • Concessionary Financing • Mixed/Blended Credit

  11. International Financial Institutions/ Development Banks • World Bank (IBRD) • International Development Association (IDA) • International Finance Corporation (IFC) • Multilateral Investment Guarantee Agency (MIGA) • International Centre for Settlement of Investment Disputes (ICSID)

  12. Money • Hard (International) Currencies vs. Soft Currencies • Functions of Currency - medium of exchange - unit of account - store of value

  13. Foreign Exchange Market • Credit (Financing) • Clearing • Hedging • Spot Market vs. Forward Market

  14. Foreign Exchange Rate • Currency Equilibrium • Effect of Devaluation • Exports and Employment • Imports and Consumer Welfare

  15. Exchange Rate Systems • Gold Standard • Par Value (Adjustable Peg) • Crawling Peg (Sliding or Gliding Parity) • Wide Band • Floating (Flexible) System

  16. Official Classification of Exchange Rate Regimes • Floating Exchange Rate Regimes - independently floating regimes - managed floating regimes • Intermediate Exchange Rate Regimes - soft pegs - tightly managed floating regimes • Hard Peg Regimes - currency boards - exchange rate regimes with no separate legal tender

  17. Financial Implications and Strategies • Early Warning Systems • Hedging • Leading and Lagging • Invoicing • Pass-Through Costs • Other Strategies

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