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![Page 1: 1 Multinational Financial Management Alan Shapiro 10 th Edition John Wiley & Sons, Inc. PowerPoints by Joseph F. Greco, Ph.D. California State University,](https://reader036.fdocuments.in/reader036/viewer/2022072006/56649f555503460f94c7956d/html5/thumbnails/1.jpg)
1
Multinational Financial Management Alan Shapiro10th Edition
John Wiley & Sons, Inc.
PowerPoints by
Joseph F. Greco, Ph.D.
California State University, Fullerton
![Page 2: 1 Multinational Financial Management Alan Shapiro 10 th Edition John Wiley & Sons, Inc. PowerPoints by Joseph F. Greco, Ph.D. California State University,](https://reader036.fdocuments.in/reader036/viewer/2022072006/56649f555503460f94c7956d/html5/thumbnails/2.jpg)
CHAPTER 12
International Financing and National Capital Markets
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CORPORATE SOURCES AND USES OF FUNDS
I. CORPORATE SOURCES AND USES OF FUNDSA. 3 General Sources of Funds:
1. Internally-generated cash
2. Short-term external funds
3. Long-term external funds
B. Forms of Securities
1. Equity
2. Debt: the most preferred form
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CORPORATE SOURCES AND USES OF FUNDS
C. Debt Instruments Used1. Commercial Bank Loans
2. Bonds
a. Publicly issued
b. Privately issued
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CORPORATE SOURCES AND USES OF FUNDS
D. Financial Markets v. Financial Intermediaries1. Securitization
a. Definition:replacing bank loans withsecurities issued in public markets.
b. Reflects reduction in access costs due to
1.) Technological improvements
2.) Globalization
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CORPORATE SOURCES AND USES OF FUNDS
E. Corporate Governance
differences exist and fall into two general categories:
1. Anglo-Saxon (AS) Model
2. Continental European and Japanese (CEJ) Model
example: keiretsus
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The Sony Keiretsu:A System of Interlocking Directors
SONY
SUPPLIER NO.1
BANKNO. 1
TRANSPORTCO
BANKNO. 2
SUPPLIERNO.2
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CORPORATE SOURCES AND USES OF FUNDS
F. Globalization of Financial Markets-has led to
1. Global center competition:London v. NY v. Tokyo
2. Regulatory arbitrage
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NATIONAL CAPITAL MARKET AS INTERNATIONAL CENTERS
A. Principal Functions of Financial Centers
1. To transfer purchasing power
2. To allocate funds
between savers and borrowers
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NATIONAL CAPITAL MARKET AS INTERNATIONAL CENTERS
B. International Financial Market1. Most important:
a. London
b. New York
c. Tokyo
2. Other Centers for Intermediariesa. Singaporeb. Hong Kongc. the Bahamas
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NATIONAL CAPITAL MARKET AS INTERNATIONAL CENTERS
3. Prerequisites to be a global financial center
a. political stability
b. minimal government interventions
c. legal infrastructure
d. financial infrastructure
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NATIONAL CAPITAL MARKET AS INTERNATIONAL CENTERS
C. Foreign Access to Domestic Markets1. The Foreign Bond Market
a. Extension of domestic market
b. Issues floated by foreign cos. or
governments
Examples:
Yankee bonds, samurai bonds
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NATIONAL CAPITAL MARKET AS INTERNATIONAL CENTERS
c. Three Major Types of Foreign Bonds
1.) Fixed rate
2.) Floating rate
3.) Equity related
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NATIONAL CAPITAL MARKET AS INTERNATIONAL CENTERS
2. The Foreign Bank Marketa. Extension of domestic marketsb. Important funding source:
Japanese banks for U.S. firms
3. The Foreign Equity Marketa. Cross listing internationally can
1.) diversify risk2.) increase potential demand3.) build base of global owners.
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DEVELOPMENT BANKSI. The Role of Development Banks
A. General Purpose
founded by governments to help finance
very large infrastructure projects
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DEVELOPMENT BANKS
B. Types of Development Banks1. World Bank Group includes
a. International Bank for Reconstruction and Development
b. International Development Association
c. International Finance Corporation
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DEVELOPMENT BANKS
B. Types of Development Banks (con’t)
2. Regional Development Banks
finance industry, agricultural, and infrastructure projects
3. National Development Banks
concentrate on a particular industry or region.
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