国际金融英文版(托马斯A普格尔著)Chapter7.pptx

Chapter 7 International Lending and Financial CrisesInternational Lending and Financial CrisesAn analysis of the benefits of international lending and borrowing.Financial crisesWhy did many financial crises occur?How can we resolve them?What might we be able to do to make them less frequent? International Lending and Financial CrisesIn international financial capital flows, the lenders (investors) give the borrowers money to be used now in exchange for IOUs or ownership shares entitling them to interest and dividends later.International capital flows are conventionally divided into different categories by type of lender (private versus official), by maturity (long term versus short term), by existence of management control (direct versus portfolio), and by type of borrower (private or government).International Lending and Financial CrisesDirect investmentLong termloansPrivate lending and investingPortfolio investmentInternational capital flowsLending to foreign borrowerPurchasing bonds issued by a government or a foreign enterpriseShort termofficial lending and investingSee p157 for more detailsInternational Lending and Financial CrisesInternational capital flows can bring two types of benefits. First, it represents intertemporal trade, in which the lender gives up resources today in order to get more in the future, and the borrower gets resources today but must be willing to pay back more in the future. Second, it allows lenders to diversify their investments more broadly, so they can lower the riskiness of the entire portfolio of investment through greater diversification. International capital flows can be well-behaved and badly-behaved, these are the main points of this chapter.Gains and losses from well-behaved international lendingBasic assumptions: the world is stable and predictable, and borrowers fully honor their commitments to repay.Gains and losses from well-behaved international lendingPercent yearPercent yearS8Uf6Ted5bc4aVMPKof JapanMPKof U.