What risks are incurred in making loans to borrowers based in foreign
Two risks involved in making loans to borrowers based in foreign countries are foreign exchange risk and sovereign risk. Foreign exchange risk is the risk that one currency will fall or rise against another. This includes erosion (inflation); the value of the funds lent to a borrower becomes worth less, which can also be called Purchasing Power Parity (Saunders & Cornett, 2008). Foreign exchange risk […]