Difference Between Domestic and International Banks – Essay Example

The paper "Difference Between Domestic and International Banks" is an outstanding example of an essay on finance and accounting. The key differences between domestic and international banks stem from the boundaries of their operation. Domestic banks operate within a country’s geographical boundaries and economic transactions only within the country. International banks on the other hand traverse geographical boundaries and transactions of various countries can be done in these countries. Because of the smaller scale in which domestic banks operate, the financial standards are low as compared to the international banks. Also, international banks have to deal with multiple currencies because of economic globalization and this may involve a change of currencies while for domestic currencies, only a single currency is used. International banks suffer vulnerability to socio-cultural factors, economic changes and therefore have to deal with multiple restrictions while domestic banks are a bit secure to these factors (Havrylchyk, 2006). U.S. companies use international banks to run the usual financial operations of financial institutions for growth and financial developments. The companies use the banks to invest large amounts of capital especially with the aim of expanding their international business. These companies seek the partnerships of other foreign companies and thus use the international banks for the transactions. The modern multinational companies also benefit in many ways from the use of international banks. The international banks are sources of financial products and services, cash management is the key service offered (Demsetz & Strahan, 2007). The range of services enables the efficient management of the complex processes of the companies. The companies also use the banks for foreign exchange services and even equity offerings. These services give back large value to the companies and at the same time ensure the companies are well-engaged in the global business scale.