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Finance in a global context finance Global, exchange rate can affect…
Finance in a global context
International financial institutions
IMF
Financially supports countries
World Bank
Strategic :arrow_down: poverty
Financial flows :money_with_wings: :potable_water:
Economic indicators
Imbalances Surpluses & Deficits
:thunder_cloud_and_rain: market forces and government action
Public vs. private spending :world_map: :moneybag: vs. :world_map: :moneybag: :red_cross:
Multinationals
:heavy_plus_sign: customer choice :heavy_minus_sign: tax avoidance & power
Choose - where to keep :moneybag: - currency - where profit recorded
:world_map: easier to do business in some countries
Legal - tax avoidance
Transfer pricing & reinvoicing
Arm's length
principle or unitary taxation :question:
Obstacles to unitary taxation
Illegal - tax evasion
2016 :arrow_right: master & local files, country reports
Exchange rate :arrow_double_up: :arrow_double_down:
SMEs struggle with :arrow_up: :pound: & :arrow_down: :pound:
2008 £ :arrow_double_down: export market recession 2010 :arrow_right: £ more stable
Foreign exchange market
Appreciates or depreciates
use markets with same currency, several markets, set contracts in home currency, buy currency at set price
Strong or Weak
Affects imports
Demand is inelastic or elastic
government intervention
:
:check: : & :green_cross:
fixed or pegged rate
International Financial Reporting
Different rules in different countries
Should it be regulated and by who?
IASB - framework - used to make rules by standard setters
Contingent model - recognises cycle of change
IASB operates under IFRS - standards used by most countries except
Develop transparency, accountability & efficiency
provides info for investors
Law models - common and roman
English speaking countries =
Europe etc =
exchange rate can affect where MNCs keep their money
MNCs look for countries where rules make it easier to operate
