Project Report

On
International Sources of Finance
Submitted to

I.K. GUJRAL PUNJAB TECHNICAL UNIVERSITY

KAPURTHALA
In partial fulfillment of the requirement for the
Award of degree of
Master of Business Administration [MBA]

Submitted by Supervisor
Arshdeep kaur Dr. Shelly
Roll no : 2331333

DEPARTMENT OF MANAGEMENT
GLOBAL GROUP OF INSTITUTES
AMRITSAR
[2023 – 2025]

1
 Student Declaration

I Arshdeep kaur student of MBA 3rd semester declare that the project on
“ International Sources of Finance ” has been done by me under the guidance of
Dr. Shelly in partial fulfillment of MBA Program during academic year 2023 – 2025 .
All the data represented in this project is true and correct to the best of my knowledge
and belief.
I also declare that this project report is my own preparations and copied from
anywhere else.

Date :

Signature

2
 Faculty Declaration

I hereby declare that the student Ms. Arshdeep kaur of MBA 3rd semester has
undergone her project report under my periodic guidance titled ‘’International
Sources of Finance’’.
Further I hereby declare that the student was periodically in touch with me during her
Project Report and the work done by student is genuine and original.

-------------------------------------------------
[Signature of Supervisor]

3
 Acknowledgement

I feel privileged to express my sincere gratitude to my guide Dr.Shelly department of

management, Global Group of institutes for her able guidance and help in preparing
this project.
Her patience and much needed cooperation proved to be an asset to me in
accomplishing my task. Without her constant encouragement generally and valuable
critical comments, this study would not have
reached its present form. Once again, I feel externally obliged to her.
I am also thankful to all respondents who spent their valuable time in filling this
questionnaire.
Last but not least, I pay my gratitude to my family and friend for their continuous
encouragement and support

Arshdeep kaur
MBA 3rd sem
Roll no : 2331333

4
 TABLE OF CONTENTS

CHAPTER CHAPTER TITLE PAGE

NO. NO.
1 Introduction to the Company 6 - 24

2 Research Methodology 25, 26

3 Data Analysis and Interpretation 27 - 38

4 Findings of the Study 39, 40

5 Conclusion, Suggestions 41 - 43

Bibliography 44

Questionnaire 45 - 47

5
 CHAPTER - 01
INTRODUCTION

6
 In today’s interconnected world, money flow across borders, powers economics, businesses,
and opportunities. Whether a company in India is expanding overseas, a government funding
infrastructure, or startup securing global investments,
international financing plays a vital role in turning these ambitions into reality.

What is International Finance ?

International finance refers to the study and management of financial
transactions that occur across national borders. It involves the movement of
capital, currencies, investments, and financial assets between countries, and is
concerned with how businesses, governments, and individuals handle financial
operations in a global context.
This can involve borrowing money from foreign bank, issuing bonds in
international markets, or attracting foreign investors. In India, businesses often
seek international financing to expand their operations, enter new markets, or
improve their infrastructure.

Importance of International finance :

1. Facilitating Global Trade : International finance enables businesses to engage cross-

border trade by providing mechanisms to handle currency exchanges, process
international payments, and secure funding for operations. This makes global
commerce more efficient and practical.

7
2. Supporting Economic Development : By allowing the movement of capital between
nations, international finance contributes to economic growth. It brings resources that
can help create jobs, introduce new technologies, and improve productivity. This
exchange often benefits both the investing and receiving economics.
3. Enhancing Economic Stability : In a connected world, financial challenges in one
country can quickly influence others. International finance helps countries collaborate
to address such challenges, contributing to address such challenges, contributing to
more excellent stability in the global financial system.

Support
Facilitati Econom
ng Global ic
Trade Develop
ment
Enhanci
ng
Managin
Econom
g Risks
ic
Stability
Open
Funding access
Infrastruc to
ture Global
projects Resourc
es

4. Managing Risks : Businesses operating globally face uncertainties like currency

fluctuations and market changes. International finance provides tools and strategies to
manage these risks effectively, helping ensure smoother operations across borders.
5. Funding Infrastructure Projects : Infrastructure development in many countries
depends on international funding. Loans and grants from organizations like the World
Bank help improve essential services such as transportation, healthcare, and education,
fostering better living standards.
6. Opening Access to Global Resources : International finance creates avenues for
countries to access global resources and funding. This is particularly important for

projects that require large scale investments, enabling economic growth and
development.

8
 What is International Sources of Finance ?

International sources of finance refer to the funds and capital available for
businesses, governments, or individuals outside their home country’s borders. These
sources play a critical role in enabling economic growth, facilitating trade and
investment, and supporting development across nations. The primary goal is to raise
funds to support projects, investments, or operations on a global scale

International Sources of finance

Long Term Short Term

* Foreign bond
market Banker's acceptance
* Foreign bank Discounting
* Euro market Factoring
* World bank EXIM Bank of India
* IMF

1. Long Term :
Long-term sources of finance refer to the funds that a business or organization secures
for an extended period, typically over one year or more, to support its long-term
objectives, operations, and growth. These sources are usually used for investments in
assets, expansion, and major capital expenditures.

A. Foreign Bond Market :

Long-term sources of finance refer to the funds that a business or organization secures
for an extended period, typically over one year or more, to support its long-

9
 term objectives, operations, and growth. These sources are usually used for investments
in assets, expansion, and major capital expenditures.

# Participants in the Foreign Bond Market :

* Issuers: Foreign governments or corporations seeking to raise capital in international

markets.

* Investors: International investors (like individuals, banks, and institutional investors)

who buy these foreign bonds.

* Underwriters: Financial institutions that help issuers sell bonds to investors in

foreign markets.

# Advantages of Investing in Foreign Bonds :

* Diversification: Investors can spread their risk by holding bonds from different
countries, reducing their exposure to the economic and political risks of any one nation.

* Higher Yields: Foreign bonds sometimes offer higher yields than domestic bonds,
especially if the issuer’s home country has higher interest rates.

# Examples of Foreign Bond Markets :

* Eurodollar Market: A segment of the foreign bond market where bonds are issued in
U.S. dollars but outside the United States (for example, in Europe).

* Asian Bond Market: A growing market for bonds issued in Asian countries, often
denominated in local currencies or U.S. dollars.

B. Foreign Banks :

10
Foreign banks are financial institutions that operate outside their home country,
providing banking services to individuals, businesses, and governments in other
countries. These banks may establish branches, subsidiaries, or representative offices in
foreign markets or engage in cross-border activities such as lending, investing, and
providing financial services.

# Functions of Foreign Banks :

* Retail Banking: Offering personal banking services like savings accounts, checking
accounts, loans, and credit cards.

* Corporate Banking: Providing business services such as working capital financing, trade
finance, business loans, and cash management services.

* Investment Banking: Facilitating mergers, acquisitions, corporate financing, and securities

trading for businesses.

* Foreign Exchange Services: Facilitating the exchange of currencies for international

transactions.

* Wealth Management and Private Banking: Offering investment advisory services, wealth
management, and tax planning for high-net-worth individuals.

# Benefits of Foreign Banks :

* Access to Global Market: Foreign banks provide access to global financial markets,
making it easier for businesses to engage in international trade and finance.

* Diverse Financial Products: Customers may benefit from a wide range of financial
products and services that might not be available from local banks.

* Expertise in International Finance: Foreign banks often bring specialized expertise

in managing cross-border financial transactions, foreign exchange, and international
investments.

# Challenges for Foreign Banks :

11
 * Regulatory and Legal Compliance: Foreign banks must navigate the complex
regulatory environments of multiple countries, which can include different laws
regarding capital requirements, lending practices, and reporting standards.

* Cultural Differences: Adapting to the local business culture and customer

preferences can be challenging, particularly in countries with very different financial
systems.

# Examples of Foreign Banks :

* HSBC (Headquartered in the UK) operates globally, with branches in many countries.

* Citibank (Part of Citigroup, headquartered in the U.S.) has a significant presence in

multiple countries.

* Deutsche Bank (Headquartered in Germany) offers services worldwide.

* Standard Chartered (Headquartered in the UK) has a strong presence in Asia,

Africa, and the Middle East.

C. Euro Markets :

The Euro markets refer to the financial markets in which financial instruments,
particularly bonds, are issued and traded outside the jurisdiction of the domestic
financial system. The term "Euro" in this context doesn't relate specifically to the
currency, but rather to the fact that these markets are "European" in origin but function
outside traditional European borders and currency boundaries.

# Benefits of Euro Markets :

* Access to Global Capital: Issuers can tap into international pools of capital, gaining
access to foreign investors and enhancing liquidity.

12
 * Diversification of Risk: Investors in Euro markets can diversify their portfolios by
investing in foreign assets, providing an opportunity for global exposure and risk
management.

* Lower Borrowing Costs: Companies and governments may benefit from more
favorable borrowing costs in Euro markets due to increased competition and access to
investors from around the world.

* Flexible Currency Options: The Eurobond and Eurocurrency markets allow for
financing in different currencies, which can help match the currency needs of
international businesses and governments.

# Risks of Euro Markets :

* Currency Risk: In the Eurobond and Eurocurrency markets, investors are exposed to
the risk of currency fluctuations, which can affect returns.

* Regulatory Risk: Since Euro markets often operate outside national financial
regulations, there can be increased risk due to lack of oversight.

* Interest Rate Risk: Changes in global interest rates can impact the cost of borrowing
in Eurocurrency markets and affect the yield on Eurobonds.

D. World Bank :

The World Bank is an international financial institution that provides loans and grants
to the governments of low and middle-income countries for the purpose of pursuing
capital projects. It aims to reduce poverty and promote economic development by
offering financial and technical assistance to developing countries.

# Purpose and Goals :

* Poverty Reduction: The primary goal of the World Bank is to reduce global poverty
by promoting sustainable development, helping countries improve their infrastructure,
education, healthcare, and economic policies.

13
 * Economic Development: The bank supports long-term projects in infrastructure,
education, health, agriculture, and environmental sustainability to stimulate economic
growth in developing nations.

* Promoting Shared Prosperity: The World Bank strives to improve the living
conditions of people in developing countries by fostering shared prosperity and
reducing inequality.

# Key Areas of Focus :

* Infrastructure: Building essential infrastructure such as roads, schools, hospitals, and

water systems to foster economic development.

* Health and Education: Improving access to healthcare and education to raise living
standards and increase economic productivity

* Agriculture and Rural Development: Supporting agricultural innovation, food

security, and rural economic development to lift people out of poverty.

E. IMF :

The International Monetary Fund (IMF) is an international financial institution

established to promote global economic stability, support economic growth, and foster
international monetary cooperation. The IMF provides financial assistance, policy
advice, and technical support to member countries facing economic challenges such as
balance of payments problems, inflation, and currency crises.

# Purpose and Goals :

* Global Financial Stability: The IMF works to stabilize the global economy by
ensuring smooth and orderly functioning of international trade and financial markets.

* Provide Financial Assistance: The IMF provides financial support to countries

facing balance of payments problems or currency crises, helping them restore stability
and economic growth.

14
* Promote Economic Growth: By offering policy advice, technical assistance, and
financial resources, the IMF helps countries achieve sustainable economic growth and
reduce poverty.

* Surveillance: The IMF monitors global economic trends and conducts surveillance of
its member countries' economies to assess potential risks and offer recommendations.

# Functions of the IMF :

* Lending: The IMF provides short-term financial support to countries in need through
various lending programs. The primary aim is to help countries stabilize their
economies and restore growth.

* Surveillance: The IMF tracks global and national economic trends, monitors
macroeconomic and financial developments, and offers advice to help prevent crises
and improve financial stability.

* Technical Assistance: The IMF helps countries build capacity in areas such as budget
management, monetary policy, and exchange rate systems to improve governance and
economic management.

* Research and Data: The IMF collects and analyzes global economic data, providing
valuable research on topics like economic growth, inflation, fiscal policy, and
international trade.

# Criticism of the IMF :

* Conditionality and Austerity: Critics argue that the IMF’s lending programs often
come with harsh conditions, such as austerity measures, which may hurt vulnerable
populations and slow down economic recovery.

* Social and Economic Impact: Some critics argue that IMF-imposed policies can lead
to increased poverty, unemployment, and inequality, particularly in developing
countries.

15
 * Influence of Major Economies: Because the IMF's decisions are influenced by the
financial contributions of its member countries, critics argue that larger economies (like
the U.S. and European countries) have disproportionate power in shaping IMF policies.

* Lack of Transparency and Accountability: The IMF has been criticized for its
decision-making process, which some see as opaque and lacking in accountability to the
public and the countries it serves.

2. Short Term :
Short-term sources of finance refer to funds that a business or organization can
access quickly and that are typically expected to be repaid within a short period, usually
within a year. These sources are crucial for managing day-to-day operations, meeting
working capital needs, or handling temporary financial gaps.

A. Banker’s Acceptance :

A banker's acceptance (BA) is a short-term debt instrument that is issued by a company

and guaranteed by a bank. It represents a promise by the bank to pay a specified amount
of money at a future date, usually between 30 and 180 days. This instrument is commonly
used in international trade transactions, but can also be used in domestic trade to help
businesses with liquidity and financing.

# Key Features of a Banker's Acceptance :

* Issued by a Company, Guaranteed by a Bank: A banker's acceptance is created

when a business (the drawer) requests its bank (the drawee) to guarantee payment for a
future transaction. The bank accepts the liability to pay the holder of the instrument at
the maturity date.

* Maturity: Banker's acceptances usually have short-term maturities, typically ranging

from 30 to 180 days. However, some can be shorter or longer, depending on the specific
terms of the deal.

16
* Discounted Instrument: Similar to other financial instruments, banker’s acceptances
are usually traded at a discount to their face value. The holder receives the full face
value at maturity, and the difference between the purchase price and the maturity value
represents the interest or return.

* Tradability: Banker's acceptances are negotiable instruments, meaning they can be

bought and sold in the secondary market. This provides liquidity for businesses that
need immediate cash or want to trade them before they mature.

* Used in International Trade: Banker's acceptances are commonly used in

international trade to finance the import and export of goods. In such cases, the BA acts
as a guarantee for payment, reducing the risk for both the buyer and the seller.

# Example of a Banker's Acceptance in Use :

* Export Transaction: An exporter in the United States wants to sell goods to a

company in Europe. To ensure payment, the European buyer’s bank may issue a
banker’s acceptance to the U.S. exporter’s bank, guaranteeing payment for the goods at
a specified future date (e.g., 60 days). The U.S. exporter can then sell the banker’s
acceptance to an investor or financial institution at a discount, obtaining immediate cash
to fund operations.

# Advantages of Banker's Acceptances :

* Reduced Risk: Since a bank guarantees payment, the risk of non-payment is lower,
which makes it an attractive financing option for both the buyer and the seller.

* Liquidity: Banker's acceptances can be easily traded on the secondary market,

offering liquidity to the holder.

* Short-Term Financing: BA provides businesses with access to short-term financing,

without the need to take on long-term debt.

17
 # Disadvantages of Banker's Acceptances :

* Cost: The business may need to pay fees to the bank to have the acceptance issued,
and the instrument is typically discounted, meaning the company doesn't receive the full
value upfront.

* Credit Risk: If the issuing bank has credit issues, there is still some risk involved for
the holder of the BA, as payment depends on the bank's ability to pay at maturity.

* Market Risk: The secondary market for BAs may not always offer favorable prices,
which could result in a loss for the holder if they sell the BA before it matures.

B. Discounting :
Discounting is a financial process used to determine the present value of a future cash
flow or financial instrument, by applying a discount rate. In simple terms, discounting is
the method of calculating how much a future sum of money is worth today, considering
that money available today is generally more valuable than the same amount in the
future due to the opportunity to earn returns.

# Types of Discounting :

* Simple Discounting: In simple discounting, interest is calculated only on the

principal amount, not on accumulated interest. It is used for short-term financial
instruments.

* Compound Discounting: In compound discounting, the interest is calculated on both

the principal and the accumulated interest, which is typically used for long-term
financial instruments or investments.

# Advantages of Discounting :

* Helps Determine the True Value: It helps businesses, investors, and individuals
understand the true value of future cash flows or financial instruments in today's terms.

18
 * Investment Decision Making: Discounting is essential for making informed
investment decisions, especially when comparing different investment opportunities
with varying time frames and returns.

* Risk Assessment: Discounting reflects the risk associated with the future value of
money. A higher discount rate often accounts for greater risk or uncertainty in future
cash flows.

# Disadvantages of Discounting :

* Choice of Discount Rate: The discount rate is a subjective measure, and small
changes in it can significantly affect the present value, leading to differing conclusions
depending on the rate used.

* Uncertainty: Discounting assumes that future cash flows can be estimated accurately,
but this is often difficult, as future events are uncertain.

* Complicated for Long-Term Forecasting: For long-term investments or projects,

estimating future cash flows and determining an appropriate discount rate can be
challenging.

C. Factoring :

Factoring is a financial transaction in which a business sells its accounts receivable

(invoices) to a third party, known as a factor, at a discount in exchange for immediate
cash. The factor then collects the outstanding payments from the customers who owe
the business. This is often used by companies that need quick access to capital but don't
want to wait for the payment terms on their invoices to be fulfilled (typically 30, 60, or
90 days).

# Key Features of Factoring :

* Accounts Receivable Sale: The business sells its outstanding invoices (accounts
receivable) to the factor at a discounted price.

* Immediate Cash Flow: Instead of waiting for customers to pay, the business receives
immediate cash, which helps improve its working capital and liquidity.

19
* Factor Takes Over Collection: The factor assumes responsibility for collecting
payments from the customers, reducing the administrative burden for the business.

* Discount or Fee: The factor buys the receivables at a discount, typically ranging from
1% to 5% of the invoice value, depending on the risk involved, the size of the business,
and the terms of the deal.

* Recourse Factoring: If the customers fail to pay the invoices, the business is
obligated to buy back the unpaid receivables from the factor.

# Advantages of Factoring :

* Improved Cash Flow: Businesses receive immediate cash, allowing them to cover
operational expenses, pay suppliers, and invest in growth without waiting for customer
payments.

* No Debt Incurred: Factoring is not a loan; it’s the sale of an asset (accounts
receivable). This means the business doesn’t take on additional debt or interest
payments, unlike traditional financing options.

* Outsourced Collections: The factor takes over the collection process, which can
reduce administrative burdens and the cost of chasing overdue payments.

* Flexibility: Factoring provides flexible financing, especially for small and medium-
sized businesses that might struggle to secure traditional loans or lines of credit.

* Non-Recourse Option: Non-recourse factoring allows the business to offload the risk
of customer defaults to the factor, which can be beneficial for companies that deal with
customers with uncertain creditworthiness.

# Disadvantages of Factoring :

* Cost: The factoring fee can be expensive, especially for businesses with high-risk
customers or those engaging in non-recourse factoring. The business receives less than
the full value of the invoices due to the discount or fee charged by the factor.

20
 * Customer Relationship: Since the factor takes over collections, customers may be
contacted by a third party, which can affect the relationship between the business and its
customers. In some cases, customers may not appreciate dealing with a third-party
collector.

* Risk of Dependency: Frequent reliance on factoring can create a dependency on

external financing, which might hinder the development of a business’s long-term
financial health.

* Limited to Creditworthy Customers: Factors may only agree to purchase

receivables from businesses with creditworthy customers. If the business’s customers
are deemed too risky, the factor may not be willing to buy the receivables or may charge
higher fees.

# Example :

Let’s say a business has $100,000 in receivables from customers and needs immediate
cash to pay for inventory or meet payroll. The business sells these receivables to a
factoring company at a 5% discount. The factoring company gives the business $95,000
in immediate cash, and the factoring company then collects the $100,000 from the
customers. After collecting the payment, the factor may send the remaining $5,000 to
the business, minus any additional fees.

D. EXIM Bank of India :

The EXIM Bank of India (Export-Import Bank of India) is a specialized financial

institution that provides financial services to support the international trade and export
sector in India. Established in 1982, EXIM Bank plays a pivotal role in promoting and
financing India's exports, facilitating the country's participation in the global market.

# Key Functions of EXIM Bank of India :

 Export Financing: EXIM Bank provides short-term, medium-term, and long-term

financing to Indian exporters. This includes pre-shipment and post-shipment
finance,

21
helping exporters manage the working capital required for production, shipment, and
delivery of goods.

* Lines of Credit: The bank extends Lines of Credit to foreign governments, financial
institutions, and businesses to finance the export of Indian goods and services. These
credits help promote Indian exports by providing financial assistance to overseas
buyers.

* Trade Credit: EXIM Bank offers trade credit and export credit insurance to exporters
to protect against non-payment risks and encourage foreign buyers to make purchases
on credit terms.

* Export Promotion: EXIM Bank provides various programs and initiatives to promote
India's exports, such as facilitating market access, assisting with trade agreements, and
encouraging participation in international exhibitions and trade fairs.

* Project Finance: The bank finances export-oriented projects, particularly those

involving the construction of infrastructure, factories, and other export-driven ventures,
both within India and overseas.

* Financial Products: EXIM Bank offers various financial products like working
capital financing, export development funds, and trade-related financing, designed to
support exporters in all stages of their business operations.

* Overseas Investment Finance: EXIM Bank also supports Indian businesses looking
to invest in overseas markets, promoting the international expansion of Indian
enterprises. The bank offers financing for joint ventures, partnerships, and greenfield
projects abroad.

* Guarantees and Insurance: The bank provides export credit guarantees and
insurance schemes to reduce the risk of non-payment, helping exporters confidently
trade in international markets.

# Objectives of EXIM Bank :

* Promote Indian Exports: To foster the growth and development of Indian exports,
making India more competitive in the global market.

22
* Increase Foreign Exchange Earnings: EXIM Bank’s activities contribute to
enhancing India's foreign exchange earnings through its export-oriented initiatives.

* Support Indian Businesses in Expanding Globally: By facilitating easy access to

financing and encouraging investments abroad, the bank helps Indian businesses go
global.

* Encourage Technological and Infrastructure Development: EXIM Bank finances

projects and initiatives that support infrastructure development related to exports.

23
Vision :

* Promoting Global Economic Growth

* Facilitating Trade and Investment
* Supporting Sustainable Development
* Enhancing Access to Capital for Emerging Economies
* Encouraging Cross-Border Collaboration

Mission:

* Ensuring Financial Stability

* Providing Financial Access and Resources
* Supporting Capacity Building and Technical Assistance
* Promoting Innovation and Technology
* Encouraging Private Sector Participation

24
 CHAPTER – 02
RESEARCH METHODOLOGY

25
 OBJECTIVES OF THE STUDY :

1. To Study the Various International Sources of Finance Available

2. To Study the Impact of Currency and Exchange Rate Fluctuations on International
Financing
3. To Study the Risks and Rewards Associated with Accessing International Financial
Markets
4. To Learn the Legal and Regulatory Framework Governing International Financing
5. To Study Key Factors Influencing the Choice of International Financing Sources

Sampling Plan :
Designing a research plan involves data source, research approach, research
instruments were selected.
Sampling Size: 50 persons were visited for the purpose of the study.
Sampling Technique: In this study, the respondents are chosen through the random

Sources of Data:
Primary Data: Primary data is collected during the study with questionnaire on the
basis of which analysis, interpretation & findings of study have been concluded.

Tools of Presentation:
Findings have been shown in form of the Graphs & Charts and Tables.

Limitations of the study:

It is difficult to know if all the respondents gave accurate information.
Shortage of time was another limitation of the study. Mostly people don’t spare time for
fulfilling questionnaire. Hence, they may not provide true information.
Time constraints were one of the limitations during the data collection.

26
 CHAPTER – 03
DATA ANALYSIS AND
INTERPRETATION

27
1. What are international sources of finance ?

International sources Frequency Percentage

Financial resources 40 80%
obtained from
international markets
Only loans from 10 20%
international banks
Total 50 100%

Meaning

Financial resources obtained

from foreign international
markets
Only loans from international
banks

Interpretation :
80% define the international sources of finance as financial resources obtained from
foreign international markets and the other 20% define it as only loans from
international markets.

2. Which of the following is considered a primary source of international finance for

large-scale projects?

Primary source Frequency Percentage

28
 Foreign Direct 13 25 %
Investment
Domestic Bank 20 40 %
Loans

Personal Savings 2 5%

Government 15 30 %
Bonds

Total 50 100 %

Primary Sources

FDI
Domestic bsank loans
Personal savings
Government bonds

Interpretation :
40% of government bonds are considered as a primary source of international
finance for long scale project while 30% are domestic bank loans,25% are foreign direct
investment and 5% are personal savings.

29
3. Which institution provides financial assistance to countries facing balance of
payments problems?

Institution Frequency Percentage

The United 10 20%
Nations
The International 25 50%
Monetary Fund
World Trade 7 14%
Organization
Export Credit 8 16%
Agencies
Total 50 100%

Institution

The United Nations

The International Monetary
Fund
World Trade Organization
Export Credit Agencies

Interpretation :
The International Monetary Fund provides 50% financial assistance to countries facing
balance of payment ,the united nations provides 20% financial assistance and both the
world trade organization and export credit agencies provide 15% of financial assistance
to countries facing balance of payment problems.

30
4. What role do multinational corporations play in international finance ?

Role Frequency Percentage

Borrower 15 30%
Investor 20 40%
Contribute to the 12 24%
development
None 3 6%
Total 50 100%

Role
45%
40%
35%
30%
25% Role
20%
15%
10%
5%
0%
Borrower Investor Contribute to the None
development

Interpretation :
Multinational corporations are primarily invest 40% in the domestic projects. They are
major borrowers in international markets by 30% and contribute 24% to the
development of local capital markets.

5. What is the primary function of the international monetary fund in international

finance ?

Function Frequency Percentage

31
 Financial 30 60%
assistance
Loans 15 30%
Investment 5 10%
Total 50 100%

Function

Financial assistance
Loans
Invesment

Interpretation :
The primary function of the international monetary fund is financial assistance which
contribute 60 % in international finance. While the loans contribute 30% to the
international finance and investment contributes only 10%

6. What of the following is an example of an international debt instrument ?

32
 International debt Frequency Percentage
instrument
Eurobond 25 50%
Personal loan 6 12%
Government savings 10 20%
bonds
Corporate equity 9 18%
Total 50 100%

International debt instrument

60%

50%

40%

30%

20% International debt in-

strument
10%

0%
nd oa
n ds ui
ty
bo l on q
ro al b
ee
Eu on gs at
rs in or
Pe av rp
ts Co
en
m
ern
v
Go

Interpretation :
50% of Eurobonds are international debt instrument while 12% are personal loan, 20%
are government savings and 18% are corporate equity.

7. What is the purpose of a multinational syndicate loan in international financing ?

Purpose of Frequency Percentage

33
 Syndicate loan
Issue international 5 10%
bonds
Pool resources 30 60%
Investment 5 10%
Provide 10 20%
guarantees
Total 50 100%

Purpose of syndicate loan

70%
60%
50%
40%
30%
20% Purpose of syndicate loan
10%
0%
s es t es
nd rc en te
o u tm n
lb so s ra
na re ve ua
ti o ol In e g
na Po id
te
r ov
in Pr
s ue
Is

Interpretation :
60% purpose of a multinational syndicate loan is to pool resources from various lenders
for large projects and the other 20% is contributed towards providing guarantees while
both the issue international bonds and investment covers 10%

8. Which of the following is a disadvantage of using international sources of

finance ?

Disadvantage Frequency Percentage

Access to global 5 10%

34
 capital
Diversification of 5 10%
funding options
Exposure to 25 50%
currency risks
Transfer of 15 30%
technology and
expertise
Total 50 100%

Disadvantages

Access to global capital

Diversification of funding op-
tions
Exposure to currency risks
Transfer of techjnology and
expertise

Interpretation:
Exposure to currency risks is the major disadvantage because it contributes 50 % and
transfer of technology and expertise contribute 30% as a disadvantage of using
international sources of finance. While both the access to global capital and
diversification of funding options only contributes 10%

9. What type of financing involves a foreign entity making long-term investments in a

company or assets abroad?

Type of financing Frequency Percentage

Foreign direct 30 60%
investment

35
 Foreign portfolio 10 20%
investment
Sovereign wealth 10 20%
fund
Total 50 100%

Type of financing
70%

60%

50%

40% Type of financing

30%

20%

10%

0%
FDI FPI Sovereign wealth fund

Interpretation :
60% of people prefer foreign direct investment and both the foreign portfolio
investment and sovereign wealth fund are preferred by 20% of the people.

10. How do exchange rate fluctuations impact international financing options ?

Impact of exchange Frequency Percentage

rate
No impact 5 10%

36
 Moderate 15 30%
High 30 60%
Total 50 100%

Impact of exchange rate

No impact
Moderate
High

Interpretation :
10% of the respondents say that the exchange rate fluctuation have no any impact on the
international financing options whereas 30% say that it have moderate impact and the
60% say that it have high impact on the international financing options.

11. What are the major risks associated with financing through international
sources ?

Risk Frequency Percentage

Currency risk 20 40%
Inflation risk 15 30%
Liquidity risk 10 20%
All of the above 5 10%
Total 50 100%

37
 Risk
45%
40%
35%
30%
25% Risk
20%
15%
10%
5%
0%
Currency Inflation Liquidity All of the
risk risk risk above

Interpretation :
40% of the risk is the currency risk while the inflation risk is 30% and the liquidity risk is
20%

38
CHAPTER – 04
FINDINGS

39
  80% define the international sources of finance as financial resources obtained
from foreign international markets and the other 20% define it as only loans from
international markets.
40% of government bonds are considered as a primary source of international
finance for long scale project while 30% are domestic bank loans,25% are foreign direct
investment and 5% are personal savings.
The International Monetary Fund provides 50% financial assistance to countries facing
balance of payment ,the united nations provides 20% financial assistance and both the
world trade organization and export credit agencies provide 15% of financial assistance
to countries facing balance of payment problems.
 Multinational corporations are primarily invest 40% in the domestic projects. They
are major borrowers in international markets by 30% and contribute 24% to the
development of local capital markets
 The primary function of the international monetary fund is financial assistance which
contribute 60 % in international finance. While the loans contribute 30% to the
international finance and investment contributes only 10%
 50% of Eurobonds are international debt instrument while 12% are personal
loan ,20% are government savings and 18% are corporate equity.
 60% purpose of a multinational syndicate loan is to pool resources from various
lenders for large projects and the other 20% is contributed towards providing guarantees
while both the issue international bonds and investment covers 10%
 Exposure to currency risks is the major disadvantage because it contributes 50 % and
transfer of technology and expertise contribute 30% as a disadvantage of using
international sources of finance. While both the access to global capital and
diversification of funding options only contributes 10%
 60% of people prefer foreign direct investment and both the foreign portfolio
investment and sovereign wealth fund are preferred by 20% of the people
 10% of the respondents say that the exchange rate fluctuation have no any impact on
the international financing options whereas 30% say that it have moderate
impact and the 60% say that it have high impact on the international financing
options.
 40% of the risk is the currency risk while the inflation risk is 30% and the liquidity
risk is 20%

40
 CHAPTER – 05
SUGGESTIONS & CONCLUSIONS

Suggestions :
41
★ Many international financial institutions have complex application
processes. Providing clear, straightforward guidelines for funding
applications can make it easier for projects to receive financial support.
★ Many international financial institutions offer rigid repayment schedules.
Offering more flexible repayment terms would make funding more
accessible.
★ Encouraging partnerships between international financial institutions,
governments, NGOs, and the private sector can promote collaboration and
lead to more sustainable financing solutions. These partnerships could be
especially beneficial for large-scale infrastructure or development projects.
★ Providing project teams with technical assistance and mentorship in areas
such as financial management, budgeting, and legal requirements can
improve project readiness for funding. This support helps reduce the risk of
mismanaging funds or failing to meet financial obligations.

Conclusions :

42
In conclusion, international sources of finance play a crucial role in enabling the success
and sustainability of projects across various sectors globally. These sources, ranging from
multilateral development banks and private equity firms to philanthropic foundations and
crowdfunding platforms, provide essential funding to projects that may otherwise
struggle to secure capital. By supporting a wide array of projects, from infrastructure and
education to sustainability and social development, international finance helps drive
global progress, particularly in emerging and developing economies.

However, despite the availability of these resources, the process of accessing

international finance can often be complex and challenging. The need for clearer
application processes, more flexible financing terms, and improved coordination between
financing institutions is vital to increase the efficiency and effectiveness of funding.
Additionally, focusing on sustainable, impact-driven projects, building capacity for
financial literacy, and incentivizing private sector participation can further enhance the
impact of these funds.

Ultimately, by improving the mechanisms through which international finance is

allocated, managed, and monitored, the global community can better address the pressing
challenges of development, sustainability, and social equity. Strengthening these sources
of finance will ensure that projects not only receive the support they need but also
achieve long-term positive outcomes that contribute to a more prosperous and equitable
world.

Bibliography :

Books :

43
 Sachs, Jeffrey D. Penguin Press, 2005.

This book discusses how international financial institutions, such as the World Bank, can
help alleviate global poverty and provide funding for development projects.

 Radelet, Steven., Routledge, 2018.

Explores how international financial institutions, development banks, and foreign aid
mechanisms contribute to global development.

 Academic Journals and Articles :

 Williamson, John.

A seminal article explaining the role of international financial institutions like the IMF
and World Bank in shaping global economic policies and financing.

 Goyal, A.

An in-depth look at the role of international development finance institutions and their
strategies for supporting projects across the globe.

 Griffith-Jones, Stephany, and José Antonio Ocampo.

Focuses on the role of multilateral financial institutions such as the World Bank and IMF
in financing sustainable development projects.

 Websites :

https://www.worldbank.org/en/topic/finance

https://www.ifc.org

QUESTIONNAIRE

1. What are international sources of finance ?

44
  Financial resources obtained from international markets ☐

 Only loans from international banks ☐

2. Which of the following is considered a primary source of international finance for

large-scale projects?
 Foreign Direct Investment ☐
 Domestic bank loans ☐
 Personal savings ☐
 Government bonds ☐

3. Which institution provides financial assistance to countries facing balance of payments

problems?
 The United Nations ☐
 The International Monetary Fund ☐
 World Trade Organization ☐
 Export Credit Agencies ☐

4. What role do multinational corporations play in international finance ?

 Borrower ☐
 Investor ☐
 Contribute to the development ☐
 None ☐

5. What is the primary function of the international monetary fund in international

finance ?
 Financial assistance ☐
 Loans ☐
 Investment ☐

6. What of the following is an example of an international debt instrument ?

 Eurobond ☐
 Personal loan ☐
45
  Government savings bonds ☐
 Corporate equity ☐

7. What is the purpose of a multinational syndicate loan in international financing ?

 Issue international bonds ☐
 Pool resources ☐
 Investment ☐
 Provide guarantees ☐

8. Which of the following is a disadvantage of using international sources of

finance ?
 Access to global capital ☐
 Diversification of funding options ☐
 Exposure to currency risks ☐
 Transfer of technology and expertise ☐

9. What type of financing involves a foreign entity making long-term investments in a

company or assets abroad?
 Foreign direct investment ☐
 Foreign portfolio investment ☐
 Sovereign wealth fund ☐

10. How do exchange rate fluctuations impact international financing options ?

 No impact ☐
 Moderate ☐
 High ☐

11.What are the major risks associated with financing through international sources ?
 Currency risk ☐
46
 Inflation risk ☐
 Liquidity risk ☐
 All of the above ☐

47
48