BANKING AND FINANCIAL INSTITUTIONS AND SERVICES (FINC 431)

OVERVIEW

1. COURSE DESCRIPTION

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.

2. REASON FOR THE COURSE

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.

3. STUDY HOURS

4. ROLE IN CURRICULUM

Prerequisites: 
Students must have successfully completed at least one of the following two subjects: Macroeconomics (ECON 202) and Finance 1 (FINC 311).

SKILLS

  • COURSE LEARNING OUTCOMES (CLO)
  • ASSESSMENT AND GRADING
  • TEACHING METHODS
  • STUDY PLAN
  • TEXTBOOKS AND REFERENCES

5. COURSE LEARNING OUTCOMES (CLO)

Upon successful completion of this course, students should be able to:

Knowledge Level of
Learning		 Related PLO
Describe Financial Institutions (CK1)
Describe the different types and importance of the financial institutions, regulations and financial markets with focus on banking and other financial institutions’ risk management.		 Understand PK1
Cognitive Skills Level of
Learning		 Related PLO
Assess Regulatory Impacts (CC1)
Assess the importance and possible detriment of the regulatory environment provided by domestic and global governments..		 Evaluate PC1
Examine Organizations in Banking and Financial Service Industries (CC2)
Examine the different types of organizations used in the banking and financial service industries to manage financial risk.		 Analyze PC1
Apply Economics and Financial Principles (CC3)
Apply the economic and financial principles to better understand the functioning of the financial sectors and the economy.		 Apply PC4
Communication, Information Technology, and Numerical Skills Level of
Learning		 Related PLO
Use Excel/Spreadsheet (CCIT1)
Use excel/spreadsheet to conduct basic analysis of data for purposes of forecasting, simulation, scenario analysis and model business.		 Apply PCIT2
Interpersonal Skills and Responsibilities Level of
Learning		 Related PLO
Coordinate Teamwork (CIP1)
Coordinate team activity in discussing qualitative and quantitative findings.		 Characterize PIP1

6. ASSESSMENT AND GRADING

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

CLO Topic CLO Assessment and Scoring Weighting for Course Grade
Participation In-class test Project Midterm Exam Final Exam
Describe Financial Institutions (CK1) 30% 20% 50%     15%
Assess Regulatory Impacts (CC1) 30% 20% 50%     20%
Examine Organizations in Banking and Financial Service Industries (CC2)   20%   40% 40% 20%
Apply Economics and Financial Principles (CC3)   20%   40% 40% 15%
Use Excel/Spreadsheet (CCIT1) 20% 40% 40%     15%
Coordinate Teamwork (CIP1) 40%         15%

7. 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 lectures with another half of the class working on and reviewing the solutions to case studies and problem sets.

During the course, there is one assignment. The Equity Portfolio Game will be recorded as in-class tests. 

Assignment:

Financial Market Research (CK1, CC3, CCIT1 & CIP1)
Work Group: Group
Final product: APA Format Report
Language: English

Description:

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. Assignment Rubric:

8. STUDY PLAN

The course targets the 50 lessons in the study plan below. Each lesson is 1.5 class hours each; there are a total of 75 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 depending on the progress and needs of students.

   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
Practices

Reading: 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 1, 2
Videos
Practices

Reading: 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    (CK1)
  2. Explain the use of economic indicators ( CK1)
  3. Explain Monetary Policy versus fiscal policy tools  (CK1)
  4. Discuss the role of the NBC in Cambodia ( CK1)

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 ( CK2)
  2. Describe how yield variation and impact ( CK2, 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 ( CK2,CCIT1)

Lecture Note 4
Exercises Practices

Reading: 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 Practices

Reading: 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 ( CK2)
  4. Basic Bond Portfolios Strategies (CCIT1)
  5. Calculate risk & return, volatility (CCIT1)

Lecture Note 7, 8
Exercises Practices

Reading: Ch8
9

Bond Market 2

  1. Identify the various bond market instruments ( CK4)
  2. Explain the measures of the credit risks ( CK2)
  3. Explain the meaning and measures of the default risks risk premium ( CK2)
  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 Practices

Reading: 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 Practices

Reading: 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 Practices

Reading: 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 Practices

Reading: 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 Practices

Reading: 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/ Quizz

Reading: 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 Practices

Reading: 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 Practices

Reading: 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)

Lecture Note 17
Exercises Practices

Reading: Ch19
 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

Team Presentations – Complete Report (CK2, CC2, CCIT1, CIP1)

 Team presentations and feedback
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 hours

9. 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