- Introduction to Financial Systems
- Comparative Financial Systems
- Role of Financial Intermediation
- Regulation of Banks
- Risk Management in Banking
Principles of finance
- Financial Securities: Risk and Return
- Capital Budgeting
- Financial Markets: Transmission of information
If you complete the course successfully, you should be able to:
- Discuss why financial systems exist, and how they are structured
- Explain why the relative importance of financial intermediaries and financial markets is different around the world, and how bank-based systems differ from market-based systems
- Understand why financial intermediaries exist, and discuss the role of transaction costs and information asymmetry theories in providing an economic justification
- Explain why banks need regulation, and illustrate the key reasons for and against the regulation of banking systems
- Discuss the main types of risks faced by banks, and use the main techniques employed by banks to manage their risks
- Explain how to value real assets and financial assets, and use the key capital budgeting techniques (Net Present Value and Internal Rate or Return)
- Explain how to value financial assets (bonds and stocks)
- Understand how risk affects the return of a risky asset, and hence how risk affects the value of the asset in equilibrium under the fundamental asset pricing paradigms (Capital Asset Pricing Model and Asset Pricing Theory)
- Discuss whether stock prices reflect all available information, and evaluate the empirical evidence on informational efficiency in financial markets.
Unseen written examination (3 hr).
- Mishkin, F. and S. Eakins. Financial Markets and Institutions. Addison Wesley.
- Allen, F. and D. Gale. Comparing Financial Systems. MIT Press.
- Brealey, R.A. and S.C. Myers. Principles of Corporate Finance. McGraw-Hill/Irwin.