International Financial Policies determine how firms in international market work because if respective governments of the countries put restrictions on doing trade, it may be relatively difficult to trade. One of the most important advantages of international financial policies is the fact that such policies often get the backing of the government therefore international firms find it relatively easy to have access to different resources besides availing different types of concessions in duties and taxes.
On the other side, due to such international financial policies, international firms may have to work with relatively inefficient organizations due to contractual requirements. Most of the countries often attempt to bring in public owned entities to work with international firms therefore given the traditional bureaucratic inefficiencies of such public institutions, resources may not be efficiently utilized and firms may not be achieving their strategic objectives in real term. Trade Agreements
The trade agreements are formed based on the assumptions that the countries attempt to take advantage of their relative comparative advantage. Trade Agreements are often formed between two or more countries to agree together to offer certain trade concessions to each other. Trade agreements are often formed at the government level and countries to the agreement often offer tax concessions, duty rebates, removal of trade quotas etc so that trade integration can take place and countries can actually benefit from the comparative advantages of each other.
Trade Agreements have greater influence on the financial management policies because if favorable, trade agreements can relatively save lot of costs i. e. duty and tax concessions, lower interest rates etc. for the firms therefore they really have to devise policies which can allow them to manage their financial resources in most efficient manner.