In arranging international finance for new operations, raising capital from local banks or financial institutions gives new subsidiaries relief from local shareholder pressures but vulnerable to national economic conditions such as inflation or high interest rates

Question

Quizplus · Accepted Answer

Raising capital from local banks or financial institutions indeed makes new subsidiaries less subject to pressures from local shareholders, as they do not have to dilute ownership by issuing more shares. However, it exposes them to the national economic conditions of the country where they operate, such as inflation or high interest rates, which can affect the cost of borrowing and repayment terms.

In Arranging International Finance for New Operations, Raising Capital from Local