Kursu reģistrs

Statuss(Aktīvs)

Course title	International Finance
Course code	Ekon5042
Credit points (ECTS)	3
Total Hours in Course	81
Number of hours for lectures	16
Number of hours for seminars and practical classes	8
Independent study hours	57
Date of course confirmation	20/12/2021
Responsible Unit	Institute of Economics and Finance

Course developers
Dr. oec., asoc. prof. Gunita Mazūre
Prior knowledge
Ekon5089, Macroeconomics Analysis
Replaced course
EkonM007 [GEKOM007] International Finance
Course abstract
The course provides in-depth knowledge and detailed understanding of the theoretical and practical aspects of international finance. Students acquire knowledge about the principles of international payment flows, currency transactions and global financial markets operation, crowdfunding, P2P (peer-to-peer) lending platforms and other modern opportunities for investing and attracting financial resources. During the study course students acquire the theory of international monetary system, foreign exchange market operations, the activities of international financial institutions and derivatives as well as they master the ability to analyse the role of international monetary policy and financial institutions in shaping the international currency policy and assess the problems in the exchange rate and parity.
Learning outcomes and their assessment
1.Knowledge and understanding on the international financial environment and monetary system, exchange rate regimes, foreign exchange transactions and alternative ways for attracting financial resources – test, independent task, discussions. 2.Knowledge and understanding on the operation of international financial institutions, derivatives and interbank foreign exchange markets in Latvia and in the world – test, independent task, discussions. 3.Knowledge and understanding on the specifics of general government debt formation and the role of the balance of payments indicators in the reflection of international financial operations and management of the balance of payments – test, independent task, discussions. 4.Ability to perform foreign exchange calculations, analyse the monetary policy and the role of financial institutions in making foreign exchange policies, assess problems in the area of exchange rates and currency parity – test, practical tasks. 5.Ability to reasonably discuss international financial aspects, draw economically feasible conclusions and provide proposals related to a problem examined – independent task, discussions. 6.Ability to review financial policy reports and empirical research as well as analyse the balance of payments – practical tasks, discussions. 7.Ability to responsibly plan the completion of the assignments given – independent task. 8.Ability to engage in classwork and undertake responsibility for the analysis and results of the independent task as well as ability to present the results of independent task – independent task (report, presentation of the report). 9.Ability to apply the acquired knowledge and practical skills to independently formulate and critically analyse aspects and problems of international finance in the economic and financial context – independent task (report, presentation of the report).
Course Content(Calendar)
1.International financial environment and economic relations. (lectures - 2 hours) The concept and essence of the international financial environment. Facilitation, monitoring, surveillance, regulation. Basel Committee on Banking Supervision and Basel III principles and pillars, standards for supervision. International payment systems: Target2, SEPA, EBA etc. Instant credit transfers. Electronic clearing and its process. 2.Development of the international monetary system, financial and currency elements. (lectures - 1 hour) Historical development of the international monetary system. Monometallism and bimetallism. Gold standard. Bretton Woods currency system. Jamaica monetary system. Currency and financial elements of the international monetary system. European Monetary System. 3.Foreign exchange market and its characteristics. (lectures - 2 hours) International currency market, its functions and operation. Basic principles of FOREX market operation. Fundamental and technical analysis of the foreign exchange market. Exchange rate forecasting methods. Price trend formation and analysis methods. Common features and contradictions of trend models. Method of analysis "Japanese candles". Japanese candle shapes and patterns. 4.International parity, currency systems and exchange rate regimes. (lectures - 2 hours, practical work - 2 hours) Basic principles of international parity - absolute and relative parity. Interest rate parity. Principle of purchasing power parity. Fisher effect. International Fisher effect. Currencies, currency quotations and risk mitigation. Currency convertibility. Classification of the IMF exchange rate regimes. Factors influencing exchange rates: political, economic and social. Types of exchange rates: nominal exchange rate, real exchange rate, nominal effective exchange rate, real effective exchange rate. Normative theory and practical application of exchange rates. Currency intervention. Foreign exchange market risk: currency transaction risk, currency translation risk, inflation and deflation risks, currency economic risk, contract risk and competition risk. Currency devaluation and revaluation. 5.Circulation of financial and non-financial assets in international markets and alternative means of raising funds. (lectures - 2 hours, practical work - 2 hours) Monetary and non - monetary gold. Special Drawing Rights (SDR). Capital market and euro market. Digital or cryptocurrency - digital euro of the European Central Bank. Virtual, digital and cryptocurrencies, their risks. Crowdfunding services: crowdfunding, peer-to-peer loans and their platforms, real estate crowdfunding. Venture capital funds. Private investors (business angels). 6.World market for financial derivatives or currency derivatives. (lectures - 2 hours, practical work - 1 hour) Historical origin, types and characteristics of financial derivatives. Over-the-counter financial forward contracts. Standardised financial derivatives (futures). Options. Participants of the options agreement. Valuation of options. Monte Carlo imitation model. Swaps. IRS transactions. 7.International financial institutions, their activities and functions. (lectures - 3 hours, practical work - 1 hour) Structure of the system of international institutions. International multifunctional organisations, trade and regional organisations. International financial institutions: World Bank Group (International Bank for Reconstruction and Development - IBRD, International Development Association - IDA, International Finance Corporation - IFC, Multilateral Investment Guarantee Agency - MIGA, International Center for Settlement of Investment Disputes - ICSID); International Monetary Fund (IMF); Bank for International Settlements (BIS); European Central Bank (ECB); European Bank for Reconstruction and Development (IBRD); European Investment Bank (EIB). Other international institutions and organisations. 8.International payment flows and balance of payments. (lectures - 2 hours, practical work - 2 hours) Forms and types of international credits. Import and export financing. Parallel credit. Compensation credit. Balance of payments and methodological base of its formation. Current account: goods, services. The essence of transfers. Financial and capital account, its essence. Capital account. Financial account: direct investment, portfolio investment, financial derivatives, other investment, reserve assets. Statistical deviation. Reserve. Balance of payments indicators and factors influencing them. The role of balance of payments indicators in the reflection of international financial operations and balance of payments management. International investment position. Central government debt, external and internal debt of the government, debt structure and monitoring.
Requirements for awarding credit points
1.International financial environment, exchange rate calculations, international financial institutions and their aims, tasks and operation, international credits, the principles of the balance of payments, practical calculations – test (35%). 2.Study of the chosen topic of the course, which includes practical aspects of the topic as well as conclusions and proposals. Defence of the report in the form of presentation – independent task (report, presentation of the report) (55%). 3.Activity during classes (10%).
Description of the organization and tasks of students’ independent work
Getting ready for practical assignments and test. Individually or in a group developed report on the chosen course theme and its presentation.
Criteria for Evaluating Learning Outcomes
Getting ready for practical assignments and test. Individually or in a group developed report on the chosen course theme and its presentation.
Compulsory reading
1.Rupeika-Apoga R. Zelgalve E. Finanšu tirgus un tā analīzes metodes. Rīga: LU Akadēmiskais apgāds, 2009. 117 lpp. 2.Vaidere I. Starptautiskās valūtas attiecības. Rīga: LU Akadēmiskais apgāds, 2015. 141 lpp. 3.Avotiņš I., Zvirgzdiņa R. Valsts parāda vērtspapīru plūsmas vadības pilnveidošanas iespējas Latvijā, 2020. 254 lpp. 4.Krugman P.R., Obstfeld M., Melitz M. International Finance: Theory and Policy. 11th edition, 2019. 466 p. 5.Bekaert, G., Hodrick, R. International Financial Management. 3rd edition. Prentice Hall, 2014. 1002 p. 6.Cheol S.E., Bruce G. Resnick. International Financial Management. New York, 2008. 482 p. 7.Eiteman D.K, Stonehill A.I., Moffett M.H. Fundamentals of Multinational Finance. 4th Edition. Prentice Hall, 2012. 544 p. 8.Eiteman D.K, Stonehill A.I., Moffett M.H. Multinational Business Finance. 14th Edition. Prentice Hall, 2016. 567 p. 9.Madura J., Fox R. International Financial Management. UK: Cengage Learning EMEA, 2014. 671 p. 10.Moosa I. International Finance: an Analytical Approach. 3rd edition, 2010. 578 p.
Further reading
1.Global Finance in the New Century: Beyond Deregulation. Ed. by Assassi L., Nesvetailova A., Wigan D. New York: Palgrave Macmillan: CGPE, 2007. 265 p. 2.Kirton J., Farnham S., Burligton V.T. International Finance. 2009. 555 p. 3.Levi M.D. International Finance. 5th Edition. London; New York: Routledge, 2009. 567 p. 4.Levinson M. Guide to Financial Markets. Bloomberg Press, 2006. 250 p. 5.Moffett M., Stonehill A., Eiteman D. Fundamentals of Multinational Finance. USA: Prentice Hall, 2011. 704 p. 6.Praude V. Finanšu instrumenti. I d.: ieguldījumi, darījumi, analīze. Rīga: Burtene, 2009. 446 lpp. 7.Praude V. Finanšu instrumenti. II d.: ieguldījumi, darījumi, analīze. Rīga: Burtene, 2010. 487 lpp. 8.Rupeika-Apoga R. Tirdzniecība ar valūtu kā uzņēmējdarbības veids. Rīga, 2006. 335 lpp. 9.Rupeika-Apoga R. Valūtas tirgus un valūtas darījumi. Rīga: Datorzinību centrs, 2003. 159 lpp. 10.Scott Hal S. International Finance: Transactions, Policy and Regulation. UK, 2010. 1276 p.
Periodicals and other sources
1.Bank for International Settlement: Foreign Exchange and Derivatives Reports, Annual Reports. Pieejams http://www.bis.org. 2.Business Week: nedēļas izdevums. Business Week. Bloomberg L.P. Businessweek. Pieejams: https://www.bloomberg.com/businessweek. 3.Dienas Bizness: nedēļas laikraksts: Latvijas biznesa avīze. Rīga: Diena: Dagens Industri, 2005. 4.European Business Journal. International Business Verlag GmbH. Pieejams: http://www.european-business-journal.com. 5.Financial Times. England based finance newspaper. London: The Financial Times Ltd. Pieejams: http://www.ft.com/home/europe. 6.Forbes: žurnāls. Rīga: SK Media, 2010. 7. International Monetary Fund: Annual Reports, International Financial Statistics, Working Papers, World Economic Outlook. Pieejams: http://www.imf.org/external/index.htm. 8.Latvijas Banka: Monetārais apskats, Maksājumu bilance. Pieejams: http://www.bank.lv/publikacijas/publikacijas/2561. 9.The Economist. London: Economist Newspaper Ltd. Pieejams: http://www.economist.com. 10.World Bank: Annual Reports. Pieejams: https://www.worldbank.org/en/about/annual-report.
Notes
Restricted elective study course for the specialisation direction “Financial Management and Accounting” of the academic Master study programme “Economics”