International financial management also known as international finance is a popular concept which means management of finance in an international business environment, it implies, doing of trade and making money through the exchange of foreign currency. Compared to national financial markets international markets have a different shape and analytics. Proper management of international finances can help the organization in achieving same efficiency and effectiveness in all markets, hence without IFM sustaining in the market can be difficult.
The international financial activities help the organizations to connect with international dealings with overseas business partners- customers, suppliers, lenders etc. It is also used by government organization and non-profit institutions. Knowledge of international finance can help a financial manager consider how international events may affect a firm and what steps can be taken to exploit positive developments and insulate the firm from harmful ones. Among the events that affect the firm and that must be managed are changes in exchange rates as well as interest rates, inflation rates and asset values. It is difficult to think of any firm or country that is not affected in some way or other by the international financial environment. Inflation, jobs, economic growth rates bond and stock prices, oil and food prices, government revenues and other important financial variables are all ties to exchange rates and other developments in the increasingly integrated, global financial environment. Some of the benefits of international finance are:
1) Access to capital markets across the world enables a country to borrow during tough times and lend during good times.
2) It promotes domestic investment and growth through capital import.
3) Worldwide cash flows can exert a corrective force against bad government policies.
4) International trade financing helps exporting countries, especially in reducing trade deficit by spurring exports.
5) It prevents excessive domestic regulation through global financial institutions.
6) International finance leads to healthy competition and, hence, a more effective banking system.
7) It provides information on the vital areas of investments and leads to effective capital allocation
International finance promotes the integration of economies, facilitating the easy flow of capital. The free transfer of funds would eventually result in more equality among countries that are a part of the global financial system (Source: Reference Text and Search engines)
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