What Is the Meaning of International Finance?

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International finance helps corporations engage in cross-border transactions.
International finance helps corporations engage in cross-border transactions. (Image: luamduan/iStock/Getty Images)

International finance activities help organizations engage in cross-border transactions with foreign business partners, such as customers, suppliers and lenders. Government agencies and nonprofit institutions also use international finance tools to meet operating needs.

Definition

International finance covers all procedures, techniques and tools that financial institutions, such as banks and insurance companies, provide to clients. These tools may include financing agreements and transaction strategies on securities exchanges, such as the Tokyo Stock Exchange.

Significance

International finance plays a significant role in modern economies. Many companies engage in multinational activities through export and import.

Function

An international finance specialist helps a firm access global markets and use financing tools to operate in the short term and the long term. He also evaluates the company's cash levels and recommends adequate funding options.

Types of Products

Types of products available in international finance vary by location, transaction requirements and legal compliance needs. The most popular products are global corporate bonds and loans, equity shares on international markets and private transactions with foreign business partners.

Types of Institutions

Various institutions are involved in international finance transactions. They include traditional financial institutions, governments and central banks. Other organizations include microfinance and development institutions, such as the World Bank and the International Monetary Fund.

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