Tài chính doanh nghiệp - International financial management

1Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-0 INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Fourth Edition Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-1 INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Fourth Edition Chapter Objective: This chapter serves to introduce the student to the balance of payments. How it is constructed and how balance of payments data may be interpreted. 3 Chapter Three The Balance of Payments Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-2 Chapter Three Outline z Balance of Payments Accounting z Balance of Payments Accounts „ The Current Account „ The Capital Account „ Statistical Discrepancy „ Official Reserves Account z The Balance of Payments Identity z Balance of Payments Trends in Major Countries 2Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-3 Balance of Payments Accounting z The Balance of Payments is the statistical record of a country’s international transactions over a certain period of time presented in the form of double-entry bookkeeping. N.B. when we say “a country’s balance of payments” we are referring to the transactions of its citizens and government. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-4 Balance of Payments Example z Suppose that Maplewood Bicycle in Maplewood, Missouri, USA imports $100,000 worth of bicycle frames from Mercian Bicycles in Darby England. z There will exist a $100,000 credit recorded by Mercian that offsets a $100,000 debit at Maplewood’s bank account. z This will lead to a rise in the supply of dollars and the demand for British pounds. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-5 z The balance of payments accounts are those that record all transactions between the residents of a country and residents of all foreign nations. z They are composed of the following: „ The Current Account „ The Capital Account „ The Official Reserves Account „ Statistical Discrepancy Balance of Payments Accounts 3Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-6 The Current Account z Includes all imports and exports of goods and services. z Includes unilateral transfers of foreign aid. z If the debits exceed the credits, then a country is running a trade deficit. z If the credits exceed the debits, then a country is running a trade surplus. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-7 The Capital Account z The capital account measures the difference between U.S. sales of assets to foreigners and U.S. purchases of foreign assets. z In 2004, the U.S. enjoyed a $611.2 billion capital account surplus—absent of U.S. borrowing from foreigners, this “finances” our trade deficit. z The capital account is composed of Foreign Direct Investment (FDI), portfolio investments and other investments. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-8 Statistical Discrepancy z There’s going to be some omissions and misrecorded transactions—so we use a “plug” figure to get things to balance. z Exhibit 3.1 shows a discrepancy of $51.9 billion in 2004. 4Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-9 The Official Reserves Account z Official reserves assets include gold, foreign currencies, SDRs, reserve positions in the IMF. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-10 The Balance of Payments Identity BCA + BKA + BRA = 0 where BCA = balance on current account BKA = balance on capital account BRA = balance on the reserves account Under a pure flexible exchange rate regime, BCA + BKA = 0 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-11 U.S. Balance of Payments Data Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 5Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-12 U.S. Balance of Payments Data In 2004, the U.S. imported more than it exported, thus running a current account deficit of $665.9 billion. Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-13 U.S. Balance of Payments Data During the same year, the U.S. attracted net investment of $611.2 billion— clearly the rest of the world found the U.S. to be a good place to invest. Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-14 U.S. Balance of Payments Data Under a pure flexible exchange rate regime, these numbers would balance each other out. Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 6Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-15 U.S. Balance of Payments Data In the real world, there is a statistical discrepancy. Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-16 U.S. Balance of Payments Data Including that, the balance of payments identity should hold: BCA + BKA = – BRA ($665.9) + $611.2 + $51.9 = ($2.8) Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-17 Balance of Payments and the Exchange Rate Q P Exchange rate $ S D Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 7Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-18 Balance of Payments and the Exchange Rate Q P As U.S. citizens import, they are supply dollars to the FOREX market. Exchange rate $ S D Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-19 Balance of Payments and the Exchange Rate Q P As U.S. citizens export, others demand dollars at the FOREX market. Exchange rate $ S D Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-20 Balance of Payments and the Exchange Rate Q P S D As the U.S. government sells dollars, the supply of dollars increases. S1 Exchange rate $Credits Debits Current Account 1 Exports $1,516.2 2 Imports ($2,109.1) 3 Unilateral Transfers $16.4 ($89.4) Balance on Current Account ($665.9) Capital Account 4 Direct Investment $115.5 ($248.5) 5 Portfolio Investment $794.4 ($90.8) 6 Other Investments $524.3 ($483.7) Balance on Capital Account $611.2 7 Statistical Discrepancies Overall Balance $2.8 Official Reserve Account $2.8 51.9 8Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-21 Balance of Payments Trends z Since 1982 the U.S. has experienced continuous deficits on the current account and continuous surpluses on the capital account. z During the same period, Japan has experienced the opposite. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-22 Balances on the Current (BCA) and Capital (BKA) Accounts of the United States Source: IMF International Financial Statistics Yearbook, various issues U.S. Balance of Payments Trend: 1982-2004 -800 -600 -400 -200 0 200 400 600 800 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 Year Ba la nc e of P ay m en ts ($ B) U.S. BCA U.S. BKA Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-23 Balances on the Current (BCA) and Capital (BKA) Accounts of United Kingdom -50 -40 -30 -20 -10 0 10 20 30 40 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 UK BCA UK BKA Source: IMF International Financial Statistics Yearbook, various issues 9Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-24 Balances on the Current (BCA) and Capital (BKA) Accounts of Japan Source: IMF International Financial Statistics Yearbook, various issues -150 -100 -50 0 50 100 150 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 Japan BCA Japan BKA Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-25 Balances on the Current (BCA) and Capital (BKA) Accounts of Germany Source: IMF International Financial Statistics Yearbook, various issues -100 -80 -60 -40 -20 0 20 40 60 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 Germany BCA Germany BKA Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-26 Balances on the Current (BCA) and Capital (BKA) Accounts of China Source: IMF International Financial Statistics Yearbook, various issues -20 -10 0 10 20 30 40 50 60 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 China BCA China BKA 10 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-27 Balance of Payments Trends z Germany traditionally had current account surpluses. „ From 1991 to 2001Germany experienced current account deficits. „ This was largely due to German reunification and the resultant need to absorb more output domestically to rebuild the former East Germany. „ Since 2001 Germany returned to its earlier pattern. z What matters is the nature and causes of the disequilibrium. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-28 Balances on the Current (BCA) and Capital (BKA) Accounts of Five Major Countries Source: IMF International Financial Statistics Yearbook, 2000 -600 -400 -200 0 200 400 600 800 1980 1985 1990 1995 2000 2005 China BCA China BKA Japan BCA Japan BKA Germany BCA Germany BKA UK BCA UK BKA U.S. BCA U.S. BKA Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. 3-29 Sources of the U.S. Trade Deficit Chapter Objectives: Introduction to the mathematical expression between balance-of-payments and National Income Accounting. Investigate causes behind continuous U.S. trade deficits and possible solutions to correct the trade imbalance between U.S. and its trade partners. 3A Chapter Three Appendix Balance of Payment and National Income Accounting 11 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-30 Balance-of-Payments and National Income Accounting z GNP: Total value of all final goods and services produced and sold in the markets. z National Income Identity „ GNP ≡ C+I+G+(X-M) „ Where C: Consumption, I: Investment, G: Government Spending, X: Exports of Goods and Services, M: Imports of Goods and Services Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-31 Import and Export z C+I+G is the total use of goods and services in a country, z If X-M <0, then GNP<C+I+G, i.e., the country consumes and invests more than it produces.. z If X-M>0 , then GNP>C+I+G, i.e., the country consumes and invests less than it produces. Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-32 Sources of Trade Deficit z Notice that savings S ≡ GNP-C-T, where T is Taxes, so S=C+I+G+X-M-C-T z Then (S-I)+(T-G)=X-M≡BCA z CA deficit can be caused by low savings, excess investment or government spending. 12 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-33 Possible Sources z Excess Consumption z Excess Investment z Excess Government Spending z Low Savings z Strong Dollars z Attractive Financial Markets and Investment Environment z Foreign Countries’ Unfair Trade Practices z Uncompetitive US Business Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-34 Excess Consumption Consumption as Percentage of GDP 56.00% 58.00% 60.00% 62.00% 64.00% 66.00% 68.00% 70.00% 72.00% 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 Year Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-35 Government Spending Government consumption expenditures and gross investment 0 500 1000 1500 2000 2500 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 Year 13 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-36 Government Spending Federal Deficit (Cumulative=$4.4 Trillion) -700 -600 -500 -400 -300 -200 -100 0 100 200 300 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-37 Low Savings Savings as Percentage of Income -2 0 2 4 6 8 10 12 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year Sa vi ng s as P er ce nt ag e of In co m e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-38 Strong Dollars z Strong $ makes domestic products less competitive. z High interest rate causes $ strong. 14 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-39 U.S. as the Best Investment Place in the World z High return/risk ratio z More opportunities Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-40 Unfair Trade Practices z Are foreign countries (e.g. China, Japan) using unfair trade practices to gain advantages in the U.S. Market? z Will reducing trade deficits with China and Japan help improve the U.S. trade balance? Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 3-41 End Chapter Three