International Finance Transactions Essay Example | Topics and Well Written Essays - 4500 words

International Finance Transactions - Essay Example In most cases, most international financial borrowing involves syndicated loan agreements due to the large sums of money involved. In addition, most borrowing is often for financing most international projects. These agreements varies from region to region for instance, syndicated loan agreements carried out in Europe are not similar to those carried out in America. Another aspect of syndicated loan agreements is that they have developed from the traditional way to a more sophisticated method, rendering them fast and more efficient. Syndicated loan participation agreements also offer various advantages to the lending bank as well as to the borrowers. These advantages are in the form of rapid financing of international projects, cost reduction as well as efficiency. In addition, there are three major legal and practical methods of loan transfer in relation to syndicated participation agreements. These methods include assignment, novation and sub-participation. These three major method s present various advantages and disadvantages and occur in various forms. The Assignment involves the transfer of rights or benefits from one party to another. The major transactions involving the assignment are mortgages and deed trusts. ... In this case, the method involves several legal aspects and features as in syndicated loans it is often not possible to obtain approval from all the participants of the contract. The paper will discuss the concepts of syndicated loans agreements and international finance transactions. It will also analyse in depth these loan transfer methods. It will discuss their availability and occurrence as well as their advantages and disadvantages. It will also evaluate their effectiveness and the parties involved in such transactions. International Finance Transactions The integration of the three main financial service areas – that is insurance, security and banking occurred in the 80s due to the liberalization trend of financial supervision and the heating-up competition in finance industry. However, the integration threatens the banking business since the banking industry experiences huge challenges despite owning the main position in financial structure. In addition, there is regula tion of the average rate of interests for commercial banks’ deposits and loans in nearly all the countries. Consequently, there is a reduced margin between banks’ liabilities and assets leading to intense competition among banks. Due to this, the banks can only create more chances for reducing costs, increase profits and upgrade their competence by provision of a bridge hence the securitization trends1. There are many participants in international projects with each participant bringing into the project what other participants are lacking for example technical ability, procurement of supplies, financing ability, human resources, political authority, etc. In addition, due to the complex nature of project