FIN3004S Banking and Finance

Academic Year 2019/2020

Part 1 Financial systems: 1. Introduction to Financial Systems; Role of financial systems (role of households, government, and firms in terms of savings and investments). Financial intermediaries, securities and markets. Taxonomy of financial institutions. Nature of financial claims (debt versus equity, bonds and notes, fixed and floating interest rates, common and preferred stocks). Structure of financial markets (direct and indirect finance, dealers and brokers, banks, mutual funds, pension funds, and insurance companies). 2. Comparative Financial Systems; Bank-based systems against market-based systems. Legal aspects.

Part 2 Financial intermediaries: 3. Role of Financial Intermediation; Nature and process of financial intermediation. Theories of financial intermediation (transformation of assets, uncertainty, reduction in transaction costs, reduction of problems arising out of asymmetric information). Implications of financial intermediation (Hirshleifer model, effect on economic development). 4. Regulation of Banks; Regulation of banks (free banking, arguments for or against regulation, traditional regulation mechanisms, alternatives to traditional regulation). 5. Risk Management in Banking; Market risks: Liquidity risk, interest rate risk, foreign exchange risk. Credit risk: Screening and monitoring, credit rationing, collateral.

Part 3: Principles of finance: 6. Financial Securities: Risk and Return; Portfolio analysis: mean-variance portfolio theory. The portfolio selection process: the correlation of securities returns (single-index model and multi-index models). Asset pricing models: capital asset pricing models (CAPM) and arbitrage pricing model (APT). 7. Capital Budgeting; Pricing of bonds and stocks. Net present value. Project appraisal.
8. Financial Markets: Transmission of information; Efficient markets, theory and empirical evidence. Concepts of weak, semi-strong, and strong efficiency. Concepts of excess returns. Micro-structures.

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Curricular information is subject to change

Learning Outcomes:

Upon completion of this course, students should be able to:
Describe the various components and institutions of the financial system
Describe and analyse the role and functions of financial intermediation, regulation and risk management
Understand and analyse the most common financial instruments
Understand and apply the fundamental theories of finance

Student Effort Type Hours
Lectures

20

Specified Learning Activities

80

Autonomous Student Learning

100

Total

200

Requirements, Exclusions and Recommendations

Not applicable to this module.


Module Requisites and Incompatibles
Not applicable to this module.  
Assessment Strategy  
Description Timing Open Book Exam Component Scale Must Pass Component % of Final Grade
Examination: Examination 2 hour End of Trimester Exam No Graded No

60

Assignment: Main Assignment Varies over the Trimester n/a Graded No

40


Carry forward of passed components
No
 
Resit In Terminal Exam
Spring Yes - 2 Hour
Feedback Strategy/Strategies

• Group/class feedback, post-assessment

How will my Feedback be Delivered?

General feedback is provided to students on all their submitted assessment components.

Name Role
Dr Julie Byrne Lecturer / Co-Lecturer
Ms Christina Burke Tutor
Mr Neil Caraher Tutor
Miss Clare Griffin Tutor
June Neo Tutor
Charlene Tan Puay Koon Tutor

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