International Business

The International capital market as attributed to the existence of offshore markets, the creation of this forced countries to liberalize their domestic markets creating greater internationalizing of capital. Due to the wide spread of globalization which has contributed to sophisticated communications systems people all over the world can conduct business from wherever they are (this includes major world financial centers, foreign exchange ,stocks and bonds). International capital markets perform desirable economic function of directing capital to productive uses. A saver which includes (governments, businesses, and other individuals) saves a portion of their income to invest their money (foreign investment) in international capital markets. The borrowers including (governments, businesses, and people) spend more than their income who also borrows the savers investments that is entrusted to the international capital markets.

People who have invested in international capital market converts their risk free savings into risky assets with the hopes of receiving future benefits, such benefits has assisted in direct finance where companies through intermediaries like banks. This helps to create economies of scale where by increasing the capacity of funds issued each day the cost per transaction decreases. International capital markets promote economic efficiency.

To use an illustration, a saver might want to invest fifteen thousand of their funds productively, while businesses might have a great business plan but lack the funds to carry them out by shifting the funds from the saver to the companies through the capital markets, the funds are utilized to its maximum extent. This has also allowed the saver to experience a high yielding savings account which allows more revenue contribution to the economy. Entry to international capital markets can also allow a firm to reduce its cost of capital. With international capital markets, companies can seek a lower cost