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1.Varied economic systems.
2.Tariff and non-tariff barriers.
3.Political risks.
4.Environmental safeguards.
5.Dumping.
6.Cultural differnces.

3. 7.Languages differences
8.Intellectual property rights.
9.Cyber crimes.
10.Transfer pricing.
11.International taxation.
12.Economic and currency crisis.
13.Interest Rates.
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4. 14.Foreign exchange Risk.
15.Cold War.
16.International Business cycle.
17.Operational Risks.
18.Global Terrorism.
19.International cash management.
20.Credit worthiness.
21.Methods of payment.
22.Foreign exchange markets.
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5. DOMESTIC FINANCE
INTERNATIONAL
FINANCE
 It is not exposed to
foreign exchange risk
and political risks .
 It is subject to market
imperfections of one
country.
 International finance is
related to cross border
transactions and exposed
to foreign exchange and
political risks.
 It is very much subject to
market imperfections
because MNC ‘s should
operate in different
economies.
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6. DOMESTIC FINANCE INTERNATIONAL
FINANCE
 The availability of
portfolio for investment
is limited.
 It has no scope for
access to global
markets.
 It is limited in scope.
 The availability of
portfolios for investment
is wide and large across
the nations in the world.
 The MNC’s venture into
the arena of global
markets and thereby
benefit from an expanded
business.
 It has wider scope.
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7.  Money acts as a medium of exchange both in domestic
and international markets as well.
 FE market is a market for converting the currency of
one country in to that of another.
 Without FE market, the international trade and
investment on the scale that we see today would be
impossible and countries would have to resort for
barter.
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8. 1. Exchange rate risk and its management
2. Foreign exchange market
3. Exchange rate determination and forecasting
4. MNC`s investment decision
5. International working capital management
6. International accounting and taxation
7. International financing decision
8. Macro economic analysis- b/p & external debt
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9.  Domestic FM is concerned with raising and utilizing of funds for projects
with positive NPV. The company wants to minimize the cost of capital
and maximize the ROI
 MNC operates in different economic, political, cultural, and tax
environments.
 They operate in various product factor markets
 They trade in large number of currencies other than home currency-
assets-liabilities-receivables and payables in different currencies.
 They have easy access to domestic and international capital markets and
access to different markets and instruments
 They are exposed to foreign exchange and political risks in addition to
interest rate and credit risks.
 Investments can be made in different markets, instruments etc. and has
wider choices.
 So financial decisions are more complex than a purely domestic company.
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IFM
Internatio
nal
financial
markets
Internationa
l financial
systems
Foreign
Exchange
market
Currency
convertibility
BOP

11. DOMESTIC FINANCIAL
MGT
INTERNATIONAL
FINANCIAL MGT
 Single currency
 Financial instruments
use is limited.
 Unique economic and
legal systems.
 Single language or few
 Multiple
 Large number of
futures,interest
rates,swaps etc
 Different economic and
legal systems.
 Language differences
are the core of the
difficulties.
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12. DOMESTIC FINANCIAL
MGT
INTERNATIONAL
FINANCIAL MGT
 Limited cultures and
subcultures.
 Country specific
accounting standards
and GAAP principles.
 Risks are related to
domestic country.
 Multicultural ,different
values, ethics and code of
conduct.
 Different accounting
standards and GAAP
principles in different
countries .
 Multiple risks such as
interest rate risks,currency
risk,political risks etc.
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1.Transfer funds from one nation currency to another.
2.Transfer of purchasing power is necessary.
3.Import of food items,petroleum
products,technology,life saving drugs from foreign
countries.
4.For availing services like
education,tourism,healthcare,insurance,banking,hospit
ality,telecommunication,entertainment.