Question

What are the special challenges of international credit analysis as opposed to domestic credit analysis? How can a bank meet these challenges? 250 words

Answer 1

Special challenges for international credit analysis as opposed to domestic credit analysis are as follows -

A. In international credit analysis, there would be an element of of foreign exchange fluctuation and that will be impacting the profits to a higher extent, in the case of domestic analysis the element of foreign exchange with not be impact the profits much.

B.there would be a largest interest rate fluctuation because of a large number of monetary policy of different countries Central bank.

C.there would be a larger risk exposure due to micro factors of various countries like inflation and interest rate risk

D.there will be a higher exposure to the fluctuations of the market because of geo political events due to various Global effects in the International Financial markets.

Bank can meet the challenges by adequately managing the credit requirements and it can also manage their is exposure to the international market proactively by taking various kinds of contracts which will be neutralized the fluctuations of various interest rates and foreign currency so it can safeguard its profits and interest of the the stakeholders.