Thursday, November 21, 2019
Two Questions of international banks Essay Example | Topics and Well Written Essays - 500 words
Two Questions of international banks - Essay Example When it is time to pay back the load, the Venezuelan company may not be able to repay in dollars because of exchange controls imposed by the government of Venezuela. Thus, the borrower could not fulfill the demand of contract because of transfer risk (Smith 112). The government policies do not allow the transfer of currency of the opponent country. The local currency is not allowed to be converted into forex so that it may be sent out of the host country. Likewise, forex can not be acquired from the outside. The tangible assets of banks are susceptible to confiscation by the local agencies. The contract between the investor and the government bodies is likely to experience a breach. Other risks are of significantly minute nature that include but are not limited to financial crisis in the host country, local peopleÃ¢â¬â¢s boycott of the bank on the grounds of religion, and delays in currency exchange and transfer because of external influences. Conclusion: International banks suffer a lot because of political risks. Political upsets are both a cause and effect of distorted international banking system. Growth of international banking and role of supply and demand conditions: Introduction: Value of a particular stock upsurges as its demand increases.