Banking Transactions and finance.

The name Commercial Banks emerged due to the fact that, the core business of the banks is trade finance. Domestic banks are financing domestic trade and international banks finance international trade. As such banking transactions are facilitating cross border trade, cross border services and cross border capital flow. Financial system of a country consists of financial intermediaries, Financial markets, financial regulators, financial instruments. Proper payment and settlement mechanism and exchange rate mechanism are integral part of financial system and are responsible for creating liquidity in the market. Banks are one of the most important financial intermediary of financial system. As such it is necessary to understand banking transactions which are responsible for settlement of trade transactions. What is International Business? The traditional definition of international business was selling of goods and services across the national border but today there is a great importance to cross border capital flow. As such we can say that cross border capital flow is integral part of international trade. What is the difference between domestic trade and international trade? In international trade buyers and sellers are from different countries and everything differs in the buyers country and seller's country. What is that everything? In international trade currencies are different. As such international trade is subject to currency risk or exchange fluctuation risk. Trade environment is different. As such it is advisable to do SWOT analysis i.e. What are the inherent Strength, what are inbuilt Weakness, what are the available Opportunities and what are the associated Threats with those opportunities. SWOT analysis deal with internal factors. It is also advisable to do PEST Analysis. PEST Analysis deals with study of a environment of a particular country in which a firm is taking exposure. PEST Analysis deals with Politiacal Environment, Economical Environment, Social Environment & Technical environment of a particular country. PEST environment deal with external factors. It is also advisable to study Regulatory environment of a particular country. International Business is subject to different types of risks. As mentioned above, international business is subject to Currency Risk, Country risk, Credit risk (default by counter party), Market risk (Market variables may change), Operational risk etc. As such it is necessary for the firm to understand proper and effective risk management strategies. International Business is subject to different types of trade barriers like tariff and non-tariff barriers. One must understand the role of GATT and WTO in international business. Both of these institutions have removed almost all barriers for international trade. Goods travel over a long distance and they are subject to perils of sea. What are the motives for International Business?