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Banking and International Finance

Definition and Explanation: Banking is a highly regulated business. It deals with the financial activities on a large scale and invests the same for profitable outcomes. The financial activities of banks are restricted by the government upon time and location. Historically, German banks own key stakes in industrial corporations; whereas, owning non-financial firms are prohibited for banks in the United States. International Finance is economics related branch which deals with foreign investment, exchange rates and its impact on international trade.

It too deals with capital flows, international investments, international projects and trade deficits. It also concludes the study currency swaps, options and futures. Examples: Banking examples are operation of banks or activities of bank including financial transactions, deposits, currency exchanges, etc. Examples of international finance are foreign investment, exchange rates, international projects, capital flows, etc. Risk

Definition: Risk relates to the expected value of future events or results. These resulted values can be negative or positive. Yet, its usage emphasizes on possible damage or harms which results from forthcoming events due to cost incurred or failure in achievement of specific benefits. Explanation: It is proven or experimented possibility of ‘loss’ or ‘low desired and expected returns’. Risk is generally referred as degree

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of uncertainty attached with future expectation or overall results.

The risk identification is realized by focusing the risk itself and not by emphasizing the effects and causes associated with it. Example: Economic risk, principle risk, currency risk, mortgage risk, inflation risk, income risk. References “Personal Finance, Corporate Finance and Investment, Banking and International Finance and Risk”, InvestorWords. com, Available from http://www. investorwords. com/cgi-bin/searchTerms. cgi? term=banking+and+international+finance Accessed 10 May, 2010.

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