Course Objectives: |
The purpose of this course is to prepare students to learn how to identify the need of foreign trade, the different kinds of foreign trade product , how to approach to the best appropriate choice, as well as assessing various risks to bank, buyer and sellers at international trade transactions.
Students will also gain the ability to understand and identify ways of analyzing the underlying risks associated with trade finance transactions. They will be trained to find-out how to carry out the processes involved international payment terms especially in open accounts, documentary collections, letters of credit and international contract guarantees.
In addition to all these students will be provided information about other types of international trade financing techniques such as buyers credit, government incentives, export credit agency facilities, project financing and also various financing alternatives through Turkish Eximbank products.
Furthermore, the students will see some other financing products like factoring, leasing and acceptance credits.
Through chapters, readings, and case analyses, we will discuss issues related to comparison of environmental framework between theories and reality.
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Course Content: |
• To recognize and identify the meaning and basics of International Trade Financing tools.
• To underline the critical importance of choosing the best among the various financing alternatives
• To explain and discuss the opportunities, benefits and structure of many different financing methods for developing international business.
• To explain and discuss the various risks in terms of finance techniques in international business life
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Week |
Subject |
Related Preparation |
1) |
• Syllabus
• Discuss Course Outline,
• Verifying full schedule. |
Review the Syllabus
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2) |
• Finance
• Financial System
• Banking System |
Homework: Assigned reading for next class session ( Chapter II ) |
3) |
• Describe International Trade Methodologies
• Identify the governing rules
• Explain International Payment Systems
• Explain how international relations affect international business activities
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Homework: assigned reading for next class session ( Chapter III ) |
4) |
• Chapter III. Export/Import Documentary Collections
• Relationship between Exporter and Remitting Banker
• Relationship between Correspondent Banks (agency arrangements)
• The duties of the remitting bank
• Liability of the banks and other parties involved
• The rules for release of documents
• Conditions for transfer of funds
• Risk Areas in Documentary Collection :
• Partial payments
• Avalizing
• Consignment of goods to banks
• Release of goods on trust
• Procedures for non-payment cases and underlying risks
• Basics of the Uniform Rules for Collection ICC 522 |
Homework: assigned reading for next class session ( Chapter IV ) |
5) |
• CHAPTER IV. Documentary Letters of Credit –
• 4.a Letter of Credit as a financing product
• Banker/Customer Relationship and the structure of Letter of Credit
• Risk factors when issuing letters of credit. The risk points.
• Why Letter of Credit is a Financing Tool ?
• Case Study: Full cycle of Letter of Credit transactions.
• 4.b Types of Letters of Credit
• Revocable – Irrevocable
• Confirmed
• Standby Letters of Credit
• Transferable
• Back-to-Back
• Deferred
• Red Clause Letter of Credits
• Revolving Letter Credits |
Homework: assigned reading for next class session ( Chapter V ) |
6) |
• Chapter V. .Contract Bonds and Guarantees
• Types of guarantees:
• Tender/bid bonds
• Performance bonds
• Retention money guarantees
• Advance payment guarantees
• Maintenance guarantees
• Counter Guarantees
• Risks of Guarantee Letter
• Wording of Guarantees
• International Banking Practices
• Uniform Rules for Demand Guarantees 758
• Expiry and Cancellation
• Case Study: Analysis of samples of Guaranty Letters
• Discussion and reviewing the text of guarantees
• Possibilities of cases which may cause a loss to the bank
• Examining the wording of a range of guarantees issued by banks abroad. |
Homework: assigned reading for next class session ( Chapter VI ) |
7) |
• CHAPTER VI. . The impacts of International Trade Financing at Balance Sheet
• Trade Finance versus ‘balance sheet lending’
• Understanding and controlling the cash flow
• Typical users of Trade Finance products and services |
Study for the mid-term exam |
8) |
MID-TERM EXAM
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Homework: assigned reading for next class session ( Chapter VII ) |
9) |
CHAPTER VII. Risk – The Critical Issues
• Understanding, identifying and managing risk
• Sovereign, Political / Country risk
• Institutional risk / Bank risk
• Corporate and other critical risks
• Importer and Exporter’s risk
• Risk mitigation, management and transfer |
Homework: assigned reading for next class session ( Chapter VIII ) |
10) |
CHAPTER IX. Export Financing
• Rules of Exporting in terms of financing
• Pre-export Financing
• Turkish Eximbank Financing Export Tools
• Country risk issues and how to cover these risks
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Homework: assigned reading for next class session ( XI ) |
11) |
CHAPTER X. Financing through Factoring – Forfaiting & Leasing
• Factoring
• Forfaiting
• Leasing
• Calculation of Average Maturities when discounting receivables |
Homework: assigned reading for next class session ( XI ) |
12) |
CHAPTER XI. Other Special Types of Conventional Trade Financing
• Country Export Agency Financing
• Project Financing
• Using the goods in the warehouse as collateral
• Asset Securitization
• Syndications
• Counter Trade |
Editing of first draft of the project |
13) |
Chapter XII
• Asset Securitization
• Syndications
• Counter Trade |
Editing of first draft of the project. |
14) |
PREPARATIONS FOR PRESENTATIONS FOR FINAL PROJECTS |
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15) |
PRESENTATIONS FOR FINAL PROJECTS ( IV ) |
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Program Outcomes |
Level of Contribution |
1) |
Explain the advances in the area of economics and finance within the framework of scientific methodology, theories and models. |
4 |
2) |
Employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions. |
4 |
3) |
Explain the evolution of financial markets and institutions in a historical context and define how they operate. |
4 |
4) |
Recognise the basic principles and regulations in the financial sector. |
5 |
5) |
Discover and create entrepreneurial opportunities to successfully establish and develop their own ventures. |
4 |
6) |
Recognise, interpret and discuss the current economic issues both at the national and global levels. |
4 |
7) |
Have the English proficiency in following and interpreting the developments in the areas of economics and finance and in conducting written and oral communication. |
3 |
8) |
Express the role of international capital markets in the global economy; accordingly define the concept of risk in terms of measurement and management. |
5 |
9) |
Identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society. |
2 |