BANKING AND FINANCIAL INSTITUTIONS AND SERVICES (ACCT 411)

AIM

The course will introduce a broad range of economic subjects including banking, financial intermediation, asset and liability management, financial decision making, financial markets and institutions, and accounting. This wide range of topics gives an in-depth understanding of the way that organizations and financial systems work.

  • COURSE DESCRIPTION
  • ROLE IN CURRICULUM
  • LEARNING OUTCOMES
  • STUDY PLAN
  • TEACHING METHODS
  • ASSESSMENT AND GRADING
  • TEXTBOOKS AND REFERENCES

COURSE DESCRIPTION

The course teaches the structure and function of financial institutions, the financial markets and institutions such as commercial banks and other financial institutions that play an important role in the development of the economy, and the main regulators of those institutions such as the Federal Reserve Bank, the European Central Bank, and the National Bank of Cambodia (NBC), and other regulators of the financial sectors.

In addition, this course also provides the students with the conceptual framework necessary to analyze and comprehend the current problems confronting managers in banking and other financial institutions. This course should be a step in developing students’ ability to work within the financial sector, in addition to enabling them an increased appreciation on how the economy and the financial sector work.

Credits: 5
Lecture Hours: 75

Self-Study Hours:

  • Reading: 50 (162 pages of technical reading)      
  • Review: 50 (short case studies)
  • Assignment: 50 (research, analysis, writing)
    150  

Total Study Hours: 225

ROLE IN CURRICULUM

Prerequisites

Enrolling students must have passed Macroeconomics.

LEARNING OUTCOMES

Upon the completion of the course, the students should be able to display an understanding of the structure and function of Commercial Banks, the National Bank of Cambodia (NBC) and other other financial institutions. This course should be a step in developing students’ ability to work within the financial sector, in addition to enabling them an increased appreciation of how the economy and the financial sector work. This course provides a synthesis of the financial theories and concepts learned in previous finance courses. It should provide a broad and specific analysis of banking and financial institutions domestically and globally. The students will develop a quantitative and qualitative understanding of bank management and how decisions are made. The course will present the importance of ROE (return on equity), APY (average percentage yield), ICGR (internal capital growth rate) and other equations in determining the success of financial institutions.

1  Knowledge

Level of Learning PLO CLO Learning Outcome
Understand PK1 CK1 Describe the different types and importance of the financial institutions and financial markets with more focus on banking and other financial institutions’ risk management.
Understand PK2 CK2 Explain the important roles of the regulators of banks and other financial institutions play that are necessary to protect the investors and depositors.
Understand PK3 CK3 Describe the computation of short-term and long-term interest rates, bond valuation and the overall structure of interest rates.

2  Cognitive Skills

Level of Learning PLO CLO Learning Outcome
Analyze PC1 CC1 Assess the importance and possible detriment of the regulatory environment provided by domestic and global governments.
Analyze PC2 CC2 Evaluate the different types of organizations used in the banking and financial service industries and the competition that is involved.
Analyze PC3 CC3 Examine and interpret in more detail how bankers and other financial institutions deal with and manage financial risk and how they manage them.
Apply PK4 CK4 Relate the economic and financial principles that help them to better understand the functioning of the financial sectors and the economy.

3  Communication, Information Technology, and Numerical Skills

Level of Learning PLO CLO Learning Outcome
Apply PCIT1 CCIT1 Use Excel to conduct basic analysis of data for purposes of forecasting, simulation and scenario analysis and to Use spreadsheets to model business.

4   Interpersonal Skills and Responsibilities

Level of Learning PLO CLO Learning Outcome
Analyze PIP1 CIP1 Evaluate qualitative and quantitative findings in a team.

STUDY PLAN

The course targets the 30 lessons in the study plan below. Each lesson is 1.5 class hours each; there are a total of 45 class hours.  The study plan below describes the learning outcome for each lesson, described in terms of what the student should be able to do at the end of the lesson.  Readings should be done by students as preparation before the start of each class.  Implementation of this study plan may vary somewhat depending on the progress and needs of students.

No Lesson Learning Outcomes Teaching and Learning Activities, Assessment
1

Overview of the Financial Markets and Financial Institutions

  1. Discuss the role of financial system and the importance to individuals and the economy as a whole ( CK1)
  2. Identify the major financial institutions  (CK1)
  3. Discuss about the financial crises and the reasons why financial sector is so highly regulated ( CK1)
  4. Explain the role of the financial instruments (CK1)
 Lecture Note 1, 2 Videos PracticesReading: Ch1
2

Overview of the Financial Markets and Financial Institutions

  1. Discuss the role of financial institutions in the financial  system and the economy as a whole ( CK1)
  2. Identify the products and services of the institutions ( CK1)
  3. Discuss about the financial innovation ( CK1)
 Lecture Note 1, 2 Videos PracticesReading: Ch1
3

Project Assignment Overview

  1. Build team ( CK4)
  2. Use the financial themes to elaborate the concept notes ( CK4)
  3. Use technology platform at CamEd ( CK4)
 Lecture Assignment: Banking & Finance Research Reading: Table of Contents
4

Central Banks

  1. Explain primary responsibilities of Central Banks ( CK2)
  2. Explain the use of economic indicators ( CK2)
  3. Explain Monetary Policy versus fiscal policy tools ( CK2)
  4. Discuss the role of the NBC in Cambodia ( CK2)
 Lecture Note 3 Reading: Ch2,3&4
5 Project Assignment 1 (MacroEconomics) (CIP1) Team Assignment Ex: Central Bank, Economists, Sosoro
6

Interest Rates & TVM

  1. Explain the time value of money and is application in bond pricing ( CK3)
  2. Describe how yield variation and impact ( CK3, CCIT1)
  3. Calculate the various bond instruments pricing ( CK4)
  4. Explain the measures of the yield and analyse the bond performance (CCIT1)
  5. Calculate risk & return, volatility ( CK3,CCIT1)
 Lecture Note 4 Exercises PracticesReading: Ch5, Ch6
7

Bank Loans

  1. Explain the economic role of the loan versus bond ( CK4)
  2. Calculate different types of loans ( CC1)
 Lecture Note 5 Exercises PracticesReading: Ch8
8

Bond Markets 1

  1. Calculate the macaulay and modified duration ( CK4)
  2. Calculate the convertible bond pricing ( CK4,CCIT1)
  3. Describe how investors manager interest rate risk ( CK3)
  4. Basic Bond Portfolios Strategies (CCIT1)
  5. Calculate risk & return, volatility (CCIT1)
 Lecture Note 7, 8 Exercises PracticesReading: Ch8
9

Bond Market 2

  1. Identify the various bond market instruments ( CK4)
  2. Explain the measures of the credit risks ( CK3)
  3. Explain the meaning and measures of the default risks risk premium ( CK3)
  4. Identify the various bond market instruments ( CK4)
  5. Explain the measures of the yield and analyse the bond performance (CCIT1)
 Lecture Note 7, 8 Exercises Practices Reading: Ch8 Team Quizz
10 Project Assignment 2 (Bank Loan) (CIP1)   Team Assignment Ex: Loan in Cambodia
11 Project Assignment 3 (Bond Market (CIP1) Team Assignment Ex: Bond Issue in Cambodia
12

Money Markets

  1. Explain the economic role of the money market ( CK4)
  2. Identify the money markets instruments ( CK4)
  3. Calculate the interest rate of the money market instruments ( CCIT1)
 Lecture Note 6 Exercises PracticesReading: Ch7
13 Project Assignment 4 (Money Market) (CIP1) Team Assignment Ex: CD, Liquidity, Treasury Management
14

Equity Markets 1

  1. Explain the economic role of the equity market versus fixed income market in Cambodia ( CK4)
  2. Describe the basics of equity valuation ( CK4,CCIT1)
  3. Update and discuss the equity portfolio management & IPOs ( CK4)
 Lecture Note 9 Exercises PracticesReading: Ch10
15

Equity Markets 2

  1. Explain and calculate the short selling ( CK4)
  2. Explain and calculate the margin call ( CK4)
  3. Equity Investments Practices (CK4)
 Lecture Note 9 Exercises Practices Reading: Ch10 Quizz
16 Project Assignment 5 (Equity) (CIP1) Team Assignment Ex: IPO, Underwriting, CSX, SECC
17 Project Assignment 6 (Equity) (CIP1) Team Assignment Ex: IPO, Underwriting, CSX, SECC
18

Derivatives Markets 1

  1. Explain the fundamental characteristics of futures and options ( CK4,)
  2. Describe the advantages and the disadvantages of each markets ( CK4)
 Lecture Note 10 Exercises PracticesReading: Ch11
19

Derivatives Markets 2 

  1. Explain the basic difference of futures, options ( CK4)
  2. Calculate basic gain and losses of futures and options ( CK4,CCIT1)
  3. Design gain and losses diagrams ( CK4,CCIT1)
 Lecture Note 10 Exercises PracticesReading: Ch11
20

Derivatives Markets 3

  1. Calculate gain and losses for each ( CK4, CCIT1)
  2. Case study: Disney( CK4, CCIT1)
  3. Introduction to Option Strategies ( CK4,CCIT1)
 Lecture Note 10 Exercises Practices Tean Quizz Reading: Ch11
21 Project Assignment 7 (Derivatives) (CIP1) Team Assignment Ex: CDX Visit, SECC
22 Reviews (MidTerm) Lecture Exercises Practices
23

Commercial Banks

  1. Explain how banks work ( CC1)
  2. Discuss the development and recent trends ( CC1)
  3. Explain how banks make lending decisions and how they price their loans ( CC1)
  4. Discuss the regulation on consumer protection and responsibility of banks ( CK4)
 Lecture Note 11 Exercises PracticesReading: Ch13,14,15
24

Banks in Cambodia

  1. Discuss on the regulation in the Cambodian market ( CC2)
  2. Explain the characteristics the Cambodia market ( CC1)
  3. Identify the different types of loans ( CC1)
 Lecture Note 12 Exercises Practices/ QuizzReading: Ch13,14 Reading: Ch15
25 Project Assignment 8 (Bank 1) Team Assignment Ex: Banks
26 Project Assignment 9 (Bank 2) Team Assignment Ex: Banks
27

Fintech in Cambodia

  1. Discuss the development and recent trends in the banking industry ( CC1)
  2. Explain the characteristics of the payment system in Cambodia ( CC1)
  3. Fintech in Cambodia
 Lecture 12 Exercises PracticesReading: Ch13, 14,15
28 Project Assignment 10 (Fintech 1) (CIP1) Team Assignment Ex: Fintech
29 Project Assignment 11 (Fintech 2) (CIP1) Team Assignment Ex: Fintech
30

International Banking

  1. Discuss the reasons why banks are regulated ( CC1)
  2. Explain the international regulation of foreign banking activities ( CC1)
  3. Explain the risks involved in international lending ( CC1)
 Lecture Note 13 Exercises PracticesReading: Ch14
31 Project Assignment 12 (International Bank) Team Assignment Ex: ADB, Basel, World Bank
32

Financial Institutions: Micro-Finance Institutions in Cambodia

  1. Explain the characteristics the savings institutions, the other finance companies such as microfinance ( CC2)
  2. Discuss on the roles of MFI in Cambodia ( CC2)
 Lecture Note 12 Exercises Practices Reading: Ch13, 15,16
33 Project Assignment 13 (MFI) (CIP1) Team Assignment Ex: MFI
34 Project Assignment 14 (MFI) (CIP1) Team Assignment Ex: MFI
35

Financial Institutions: Insurance Companies and Pension Funds 1

  1. Explain the characteristics of life and non-life insurance ( CC1)
  2. Explain how does a life insurance company work ( CC1)
  3. Explain the role of insurance and pension funds ( CC2)
 Lecture Note 14, 15 Exercises Practices Reading: Ch17
36

Financial Institutions: Insurance Companies and Pension Funds 2

  1. Discuss on major products marketed in the Cambodian market ( CC1)
  2. Discuss about NSSF and retirement scheme in Cambodia ( CC1)
 Lecture Note 14, 15 Exercises Practices Reading: Ch17
37 Project Assignment 15 (Insurance 1) (CIP1) Team Assignment Ex: Insurance, Pension Fund
38 Project Assignment 16 (Insurance 2) (CIP1) Team Assignment Ex: General Insurance
39

Investment Banking

  1. Explain the core business activities of investment banks ( CC2)
  2. Discuss on the regulation in the industry ( CC2)
  3. Discuss on the roles of the underwriters in Cambodia ( CC2)
 Lecture Note 16 Exercises Practices Reading: Ch18
40 Project Assignment 17 (Underwriter) (CIP1) Project Assignment 17 (Underwriter) (CIP1)
41

Investment Companies 

  1. Describe what traditional and alternative investments funds do, and specifically about the recent trends in Cambodia ( CC2)
  2. Discuss on private equity and venture capital in Cambodia ( CC2)
 Lecture Note 17 Exercises Practices Reading: Ch19
42 Project Assignment 18 (Investment Fund) (CIP1) Team Assignment Ex:BRC, Obor, EMIA
43

Asset Management 1

  1. Describe relationship between return and risk (CC3)
  2. Explain portfolio diversification (CC3, CCIT1)
  3. Calculate Specific and Systematic Risks ( CC3,CCIT1)
 Lecture Note 18, 19 Exercises Practices Reading: Ch19
44

Asset management 2

  1. Describe types of investment portfolios (CC3)
  2. Discuss optimal risk return portfolio ( CC3,CCIT1)
  3. Recommend Optimal Asset Allocation ( CC3, CCIT1)
 Lecture Note 18, 19 Exercises Practices Reading: Ch19
45

Asset management 3

  1. Optimise Asset Allocation of Client ( CC3)
  2. Alternative Funds Use
 Team Quizz
46 Project Assignment 19 (Leasing and other Financial Services) (CIP1) Team Assignment Ex: Leasing, HP, …
47

Risk Management in Financial Institutions

  1. Describe what types of risks the banks are involved (CC3)
  2. Discuss on liquidity risk, financial risk, operational risk, credit risk ( CC3)
  3. Calculate Value at Risk ( CC3, CCIT1)
 Lecture Note 20 Exercises Practices Reading: Ch20
48 Project Assignment 20 (Risk Management) (CIP1) Team Assignment Ex: Banks RM
49 Reviews Lecture Exercises Practices Review for Finals
50 Reviews Lecture Exercises Practices Review for Finals
Total Hours: 75

TEACHING METHODS

This course is primarily lecture based; assigned readings will support learning and serve as a reference to material covered in class. During class, approximately half of the class will be devoted to lecture with another half of the class working on and reviewing the solutions to case studies and problem sets.

ASSESSMENT AND GRADING

Grades will be determined based on a grading score, calculated using the following assessments and score allocations:

Assessment Weight of each assessment Learning Outcome Assessed
CLO PLO
Participation 10% All CK, CC1, CIP1 All PK, PC1, PIP1
In-class tests 20% All CK, CC1, CIP1 All PK, PC1, PIP1
Assignments 20% Selected from CK, CC, CIP Selected from PK, PC, PIP
Midterm exam 25% All CK, CC All PK, CC
Final exam 25% CK1, CC2, CCIT1 PK1, PC2, PCIT1
Total grading score 100%  

Banking and Financial Institutions and Services During the course there is one assignment. The Equity Portfolio Game will be recorded as in-class tests.

Financial Market Research Assignment

Work Group: Group
Output format: APA Format Report
Language: English
Assignment: The assignment topics are selected from the sections on money markets, bond and equity and derivative markets that have been recently introduced in Cambodia. In addition, the sections on risk management and how the Cambodian financial markets can be assimilated into the ASEAN and international markets.

TEXTBOOKS AND REFERENCES

Textbook

     1. Kidwell, Blackwell, Whidbee, and Sias (2017), Financial Institutions, Markets, and Money, New York, Wiley Publisher.

References

  1. National Bank of Cambodia: NBC annual and quarterly reports, Statistics, etc.
  2. Financial Institutions in the ASEAN countries’ publications

Education Resources