financial environment 17 jan

8/3/2019 Financial Environment 17 Jan

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FINANCIAL ENVIRONMENT

BY,

Dhushiyanthini(0903110)

Shivani(0903154)


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Financial factors effecting business

These include

interest rates,

taxation changes

economic growth

inflation

exchange rates.

For example:

higher interest rates may deter investment because it costs more to borrow

a strong currency may make exporting more difficult because it may raise the

price in terms of foreign currency

inflation may provoke higher wage demands from employees and raise costs

higher national income growth may boost demand for a firm's products


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The international financial system

Global financing operations based on the gold

standard gave rise to instability, so Bretton

Woods, post World War II, saw the nascence ofthe International Monetary Fund (IMF) and World

Bank.


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financial environment

According to Herggott Beck hart, financial

system is defined as the family of rules andregulations and the congeries of financial

arrangements, institutions, agents and the

mechanism whereby they relate to each

other within the financial sector and with therest of the world.


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FINANCIAL INSTITUTIONS PROMOTING

INTERNATIONAL BUSINESS


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WORLD BANK

Created at Bretton Woods Conference in 1944

The World Bank is an international financial institution that

provides loans to developing countries for capital programmes.

The World Bank's official goal is the reduction of poverty.

all of its decisions are guided by a commitment to promote

foreign investment, international trade and facilitate capital

investment.


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Roles & Objectives

Main focus Reconstruction & Development

in situations like

Natural Disasters

Needs affecting developing countries

Post conflict rehabilitation

Needs affecting a transitioning economy


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Functionsof WorldBank

Creating

infrastructure

Implementlegal system

that encouragebusiness

Protectindividual &

property rights

Developingfinancialsystems


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Other Functions

Improving living standards

Poverty reduction strategies

Clean technology fund management

Clean air initiative

United Nations development business


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, China and India, other low-income-GNP per capita income of betweenUS$ 675 or less, 41 nations includingTanzania, Kenya, Zambia and Malawi.

Lowincome

economies

GNP per capita of between US$ 676and US$ 2,695, 40 nations includingZimbabwe, Mexico and Thailand.

Middleincome

economies

, GNP per capita of between US$8,356 or more, 24 nations includingUK and the USA.

Highincome

economies

The World Bank classification


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IMF came into existence in 1945

,after the end of World War II andat the beginning of the Cold War

year

its headquarters in Washington,D.C.

comprises 185 member nations.Headquarter

offers financial and technical aid toits member nations

Services

offered


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objectives

1

Eliminate any disastrous repetitions of theGreat Depression.

2

Facilitate global financial stability bystabilizing prevailing exchange rates.

3

Reduce poverty so that economic growthis triggered and Increase internationaltrade and employment.


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functions of IMF:-

surveillance

Lending

Technical assistance


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RESERVE BANK OF INDIAEstablishment: April 1, 1935

Acc. to provisions of RBI act 1934


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FUNCTIONS OF RBI

Traditional

Issue of currencynotes

Banker to otherbanks

Banker to thegovernment

Exchange ratemanagement

Credit controlfunction

Supervisory

function

Promotional

Development offinancial system

Development ofagriculture

Provision ofindustrial finance

Provision of training

Collection of data

Publication ofreports

Promotion of

export throughrefinance

supervisory

Granting license tobanks.

Bank inspection

Control over NBFIs.

Implementation ofdeposit insurancescheme.


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financial environment 17 jan

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