The purpose of this chapter is to discuss the various aspects of financing. The chapter covers both the local and international sources of financing that are available to public and private buyers, including the various private and nonprofit financial institutions.The chapter also examines such offshore financial centers as the Euromarket and the Asian Dollar Market.
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Financial Strategies: Financing and
Currencies
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Chapter Outline
Nonfinancial Institutions
- Self Financing and Debt Financing
- Equity Financing
Financial Institutions
Government Agencies
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Chapter Outline
International Financial
Institutions/Development Banks
Disputes (ICSID)
IMF (International Monetary Fund)
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Chapter Outline
Money
Foreign Exchange
Foreign Exchange Market
Foreign Exchange Rate
- Currency Equilibrium
- Effect of Devaluation
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Chapter Outline
- Gold Standard
- Par Value (Adjustable Peg)
- Crawling Peg (Sliding or Gliding Parity)
- Wide Band
- Floating (Flexible) System
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Chapter Outline
Financial Implications and Strategies
- Early Warning Systems
- Hedging
- Leading and Lagging
- Invoicing
- Pass-Through Costs
- Other Strategies
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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
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Equity Financing
Selling Stock
Venture Capital
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Financial Institutions
Factoring Houses
Forfaiting
Banks
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Government Agencies
Concessionary Financing
Mixed/Blended Credit
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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)
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Money
Hard (International) Currencies vs Soft Currencies
Functions of Currency
- medium of exchange
- unit of account
- store of value
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Foreign Exchange Market
Credit (Financing)
Clearing
Hedging
Spot Market vs Forward Market
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Foreign Exchange Rate
Currency Equilibrium
Effect of Devaluation
- Exports and Employment
- Imports and Consumer Welfare
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Exchange Rate Systems
Gold Standard
Par Value (Adjustable Peg)
Crawling Peg (Sliding or Gliding Parity)
Wide Band
Floating (Flexible) System
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Official Classification of Exchange Rate Regimes
- independently floating regimes
- managed floating regimes
- soft pegs
- tightly managed floating regimes
- currency boards
- exchange rate regimes with no separate legal tender
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Financial Implications
and Strategies
Early Warning Systems
Hedging
Leading and Lagging
Invoicing
Pass-Through Costs
Other Strategies