International Financial Market

Fair trade, multinational banking, multinational companies and globalization are the main issues that are dominating the arena of international financial market. Globalization has emerged as the most important word of the modern financial market and quickly incorporating world production, consumption markets and the far-flung dispersal of modern technology has played a major role in widening the premise of international finance.
The machinery which enables people (customers) to deal freely in stocks, bonds,and all kind of investments, which allows trade in any commodity, and allows trade in other freely exchangeable items of economic value at low dealing costs and at prices that shows effective markets, is a financial market as defined in the terms of economics.

So, this can be said that, a financial market means a common platform where borrowers and lenders, buyers and sellers, come together to trade with each other.

There are two types of financial markets:
|National financial market: Traders platform which is limited to the particular country only.
International financial market: Traders platform which has no territorial limitations, may be described as the “global platform for traders”

 

The financial markets, according to the specific characteristics, can be further divided into subtypes:

Stock markets: This market is responsible for providing financing by the issuance of shares,and stock
Bond markets: Bonds, are the main source of financing here
Foreign exchange markets: This helps foreign exchange trading.
Money markets: Short term debt financing and investments are provided through this platform
Derivative markets: Provider of financial risk management tools
Insurance markets, which facilitate the redistribution of various risks
Futures markets
Commodity markets: various kind of commodity exchanges exist here
All these markets are jointly called capital markets and, according to the characteristics of trade, this capital market can be divided further into primary markets and secondary markets.

Financing can be defined as the procedures of utilizing available funds to get maximum returns on a fertile enterprise. It can be granted as a survey of the ways persons, concerns and institutions arrange, funds over time considering the related risks. International Finance can also be termed as the arm of economics. International financing can also be marked as good management of international wealth and other properties.

Foreign capital markets are a prime source of allocating funds for most domestic and foreign auxiliary operations. International trade is highly affected by the excitability in the foreign capital markets and the bounded measures to full capital account fungibility taken on by many countries.

International exchange rates, as mentioned earlier, are an important factor in deciding the fates of international finance as international trading, export and import, and everything can suffer losses in income as an effect of the fluctuations in the international exchange indices. Forward Currency Contracts among the traders can be helpful in preventing this possibility of disaster. International Finance is related with the same methods of making use of the financial resources and about international business, but is tightened up by the drifts of capital and currencies between countries and the deviation in the exchange rates among various currencies.

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Last Updated on : 1st August 2013

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