Chapter 18 Financial Strategies: Financing and Currencies Chapter Outline  Nonfinancial Institutions - Self Financing and Debt Financing - Equity Financing  Financial Institutions  Government Agencies Chapter Outline  International Financial Institutions/Development Banks – – – – – World Bank International Development Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID)  IMF (International Monetary Fund) Chapter Outline  Money  Foreign Exchange  Foreign Exchange Market  Foreign Exchange Rate - Currency Equilibrium - Effect of Devaluation Chapter Outline    Exchange-Rate Systems Gold Standard Par Value (Adjustable Peg) Crawling Peg (Sliding or Gliding Parity) Wide Band Floating (Flexible) System Official Classification of Exchange Rate Regimes Evaluation of Floating Rates Chapter Outline  Financial - Implications and Strategies Early Warning Systems Hedging Leading and Lagging Invoicing Pass-Through Costs Other Strategies Self Financing and Debt Financing  own capital  withholding of dividends  trade credit  joint venture partners  borrowing from affiliated firms and employee retirement fund  issuing commercial paper or bonds Equity Financing  Selling Stock  Venture Capital Financial Institutions  Factoring  Forfaiting  Banks Houses Government Agencies  Concessionary Financing  Mixed/Blended Credit International Financial Institutions/ Development Banks  World Bank (IBRD)  International Development Association (IDA)  International Finance Corporation (IFC)  Multilateral Investment Guarantee Agency (MIGA)  International Centre for Settlement of Investment Disputes (ICSID) Money  Hard (International) Currencies vs Soft Currencies  Functions of Currency - medium of exchange - unit of account - store of value Foreign Exchange Market  Credit (Financing)  Clearing  Hedging  Spot Market vs Forward Market Foreign Exchange Rate  Currency Equilibrium  Effect of Devaluation - Exports and Employment - Imports and Consumer Welfare Exchange Rate Systems  Gold Standard  Par Value (Adjustable Peg)  Crawling Peg (Sliding or Gliding Parity)  Wide Band  Floating (Flexible) System Official Classification of Exchange Rate Regimes    - Floating Exchange Rate Regimes independently floating regimes managed floating regimes Intermediate Exchange Rate Regimes soft pegs tightly managed floating regimes Hard Peg Regimes currency boards exchange rate regimes with no separate legal tender Financial Implications and Strategies  Early Warning Systems  Hedging  Leading and Lagging  Invoicing  Pass-Through Costs  Other Strategies ... Devaluation - Exports and Employment - Imports and Consumer Welfare Exchange Rate Systems  Gold Standard  Par Value (Adjustable Peg)  Crawling Peg (Sliding or Gliding Parity)  Wide Band  Floating... Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID)  IMF (International Monetary... Outline  Financial - Implications and Strategies Early Warning Systems Hedging Leading and Lagging Invoicing Pass-Through Costs Other Strategies Self Financing and Debt Financing  own capital