International finance is not simply corporate finance with an exchange rate. It is true that the exchange rate is an integral part of international finance in terms of foreign exchange. It is true that the foreign exchange markets that offer critical information and opportunities for international corporations as they undertake financing decisions and capital budgeting (Cohen & Yagil, 2007). However, international finance is about cross-border trade, and it is the dynamics of this trade that influence the exchange rate. According to Rhodes & Robinson (2008), international trade and the consequent international corporations are influenced by a number of factors which include cultural, domestic political, economic and environmental regulations. International finance could not exist without nations, without national economies and without international trade. Therefore, since countries trade with each other and they use their own currencies, then the exchange rates comes in to ensure that the goods and services traded are paid for. This is what influences the prices at which currencies trade.
With globalization, international finance has gone beyond the mere trade in imports and exports. It is more of a global economy. There are international regulations that guide international finance such as those governing the international trade on arms and weapons, narcotics, environmentally sensitive goods and wildlife among other things (Ahern & Weston, 2007). International financing is also involved in financing development projects in developing countries with bodies such as the International Monetary Fund and the World Bank being huge international financiers. What this means is that the international financial system is critical to the effective organization of international economies. For example, the financial crisis in 2007-8 had an impact on global economies. The exchange rate just forms a part of international finance but it is not the core of it. Therefore, international finance is more than just corporate finance with an exchange rate.
References
Ahern, K., & Weston, J. (2007). M&As: The good, the bad, and the ugly. Journal of Applied Finance, 17(1), 5–20.
Cohen, G., & Yagil, J. (2007). A multinational survey of corporate financial policies. Journal of Applied Finance, 17(1), 57–69.
Rhodes-Kropf, M., & Robinson, D. (2008). The market for mergers and the boundaries of the firm. Journal of Finance, 63(3), 1169–1211.
