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International Financing Decision: A Managerial Perspective

Cristian Paun ()

REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, 2012, vol. 13, issue 3, 411-425

Abstract: International financial decision is not a simple one and it is mainly characteristic to multinational companies or to companies located in countries with a reduced saving rate that is not sufficient to cover all internal financing needs (is the case of emerging markets like Romania is). The financial managers of Romanian companies need to have tools to decide if they will use a credit in lei from local banks or will try to obtain a credit from abroad in a foreign currency (in Euro, USD etc.). The required assumption in this case is that capital account between Romania and other countries is totally free. This decision is not a simple one and it should be based on theoretical background. The financing decision depends upon two main criteria: cost and risks assumed by the company. This paper will discuss the solution in this case to compare different international financing opportunities that are expressed in different currencies from the perspective of a debtor (company).

Keywords: international cost of capital; international capital budgeting; international credit; international financing decision. (search for similar items in EconPapers)
JEL-codes: G15 G21 G32 M16 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:rom:rmcimn:v:13:y:2012:i:3:p:411-425

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