JEM032 - Banking
| Credit: | 6 |
|---|---|
| Credit ETCS: | 6 |
| Hours weekly: | 2/2 |
| Status: | English Magisterský - Economics and Finance - povinný Masters - all Masters - Finance, Financial Markets and Banking - obligatory Semester - winter |
| Obligatory courses: | JEB010 - Macroeconomics II JEB045 - Financial Management |
| Recommended courses: | JEM128 - Financial Modeling Using MS Excel, VBA |
| Course supervisors: | prof. Ing. Michal Mejstřík CSc. |
| Teachers: | prof. Ing. Michal Mejstřík CSc. Mgr. Magda Pečená Ph.D. PhDr. Petr Teplý Ph.D. |
| Assistants: | Mgr. Jakub Gleta Mgr. Pavel Hrbek PhDr. Goran Serdarević M.A. |
| Schedule: | Wednesdays 17:00 - 18:20 in Room No. 314. |
| Announcements: | On May 28, 2009, the Rector of Charles University awarded the bilingual book Basic Principles of Banking as the best didactical-pedagogical book published in 2008. |
| Literature: | Mejstřík M., Pečená M., Teplý P. (2008).Basic Principles of Banking, ISBN 978-80-246-1500-4, Karolinum press, 2008 (The book can be purchased through http://www.cupress.cuni.cz/ink_ext/index.jsp?include=podrobnosti&id=3722). |
| Description: | The course familiarizes students with the basic terminology of banking and financial markets, as well as different approaches to bank transactions management. As one of its starting points it describes various models of interest rates movements, including the consideration of risk and maturity, together with appropriate manners interest rates risk management. An analysis of financial institutions is further developed by the assessment of their activities, the related credit, liquidity, market and operational risks. The course outlines banking management techniques which tries to create value for shareholders whilst keeping these risks in mind. |
| Content: | 1. Introduction and basics: history of banking, basic banking principles, banking regulation, banking risks, heterogeneity of banks. 2. Basel Accord, the central bank -- regulation and monetary policy, money supply and monetary aggregates, models of money multiplier for M1 and M2. Central bank as a creditor of the last resort, private vs. public regulation, financial systems and financial intermediaries in CZE and world-wide. 3. Interest rates behavior: interest rates measurement, the present value, nominal vs. real interest rate, equilibrium interest rate, loan funds theory, a liquidity preference model, perfect and imperfect capital markets, perpetuity and annuity. 4. Bank financial statements , bank efficiency, basic banking operations, funds and their utilization, bank returns, banks balance sheet, banks profit and loss account, profitability, liquidity, insolvency risk, liquidity risk, economies of scale, efficiency and specific DuPont analysis of ROE and ROA, loss loans reserves, current situation of Czech banks. 5. Basic principles of assets and liabilities management (ALM): liquidity management, reserves, assets management, liabilities management, functions and sources of equity capital, capital adequacy and its development, stability and regulation of banking system, instability and banking panic, financial intermediation as delegated monitoring. 6. Interest rates structure in view of their risks and time structure, interests and taxes, yield curve, expectations hypotheses, theory of segmented markets, 7. Interest rate risk management, gap analysis and assets and liabilities maturities analysis, duration and convexity for approximation of interest rates sensitivity analysis, banks classification according duration of assets and liabilities, interest rates hedging, Case: American Savings and Loans 8. Banking liabilities operations: liabilities management, retail deposits, large deposits, at sight deposits, term deposits, deposit certificates, savings accounts, bank bonds, credits from other banks (interbank market), credits from the central bank, interest rates of deposits and loans, 9. Banking assets operations: credit management, principles, credit types, maturities, securities and collateral, bank types, portfolio allocation, debtors and creditors behavior in economic cycle, assets and liabilities maturity structure reconciliation, credit policy, lending limits, banking supervision, credit risks, rating, credit process, dubious loans, provisions and management of potential loss, 10. Short term credits and loans: overdrafts, NOW accounts and credit cards, working capital credits; private loans, consumer loans, promissory notes, guaranteed loans, middle-term and long term credits: syndicated loans, mortgages, long and medium term consumer loans and relevant institutions, credit scoring of consumers 11. Banks and payment services, banking and financial innovation: factoring, forfeiting, leasing, financial innovation with aim of risk mitigation (mortgages, deposit certificates with variable interest rate, futures), new technologies (credit cards, securitization, internationalization), new regulations mitigation, 12. Bank investments in financial markets, assets and liabilities cash-flow stream-lining, risk vs. return investment goals, taxes, regulation, investment strategies, bank investments on international markets, FX risk and hedging, obligatory reserves in history and today, capital adequacy today and in history, daily balancing of funds available and needed, 13.-14. Banking sector developments as a part of financial services in EU and worldwide: universal and specialized banks, merchant and investment banks, regulations, competition and structure of commercial banking, competition in savings banks, international banking, BASEL II, non-banking financial institutions competition, financial holdings, economies of scale, insurance companies, investment funds, pension funds, brokerages, investment banks and securities markets. Bank capital and state-owned banks privatization. |
| Seminar: | See the page "Banking - tutorials" |
| Examination dates: | 1) THU 12/1 at 9.00 - 10.30 written exam, oral exam on 12/1 at 16:00 2) WED 18/1 at 18.00 - 19.30 written exam, oral exam on 19/1 at 16:00 3) WED 8/2 at 18.00 - 19.30 written exam, oral exam on 9/2 at 16:00 |
| Course requirements: | To prepare a credit application, credit appraisal, write down an essay, pass a mid-term test. i) Credit application (max 30 pts), credit appraisal (max 10 pts) ii) Essay (max 20 pts) iii) Mid-term (max 30 pts) iv) Class (tutorial) participation (max 10 pts) v) Final written test and oral exam (max. 100 = 60+40 points). i.e. 200 pts in total. Please note that you need at least 50 pts and at least 50% of maximum points from each assignment from tutorials and from a written final test to be admitted to take an oral exam from the course. If points are missing such as failed mid-term test, you are supposed to prepare extra homework. |
| Downloadable: | Lecture 01 - Financial markets Lecture 03 - Central banking Lecture 04 - Risk management Lecture 05 - Banking regulation Lecture 05 - Banking regulation (annex) Lecture 06 - bank capital Lecture 07 - Liquidity risk Lecture 08 - Credit risk Lecture 09 - Quo vadis banking? (J. Lamser) Lecture 10 - Non-interest income of banks I Lecture 10 - Non-interest income of banks I (annex) Lecture 11 - Banking yesterday and tomorrow Lecture 12 - Non-interest income of banks II Lecture 12 - Non-interest income of banks II (annex - ICC report Global Risks and Trade Finance) Lecture 2 Banks |