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25409 Managing Financial Institutions

UTS: Business: Finance and Economics
Credit points: 6 cp

Subject level: Undergraduate

Result Type: Grade and marks

Requisite(s): 25556 The Financial System
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.

Handbook description

This subject teaches the fundamentals of managing a financial institution. The principles are applied in the context of banks, but have a wider relevance to the management of non-bank financial institutions. The structure of the financial system and problems posed by managing financial institutions in today's environment are given real-time practical applications in case studies which assess the performance of financial institutions from a creditor's, investor's and regulator's viewpoint. Case studies of bank failure and success are interposed among principles of asset liability management, strategic planning and responses to a changing environment in prudential supervision, e-commerce and new taxation treaties.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

  1. understand and appreciate various aspects of sound management of modern financial institutions
  2. understand the importance of risk management in financial institutions
  3. analyse the performance and risks inherent in different types of financial institutions
  4. appreciate the ethical issues involved in the management of financial institutions.

Contribution to graduate profile

This subject provides knowledge of financial institutions as part of the banking major. The students gain the knowledge of managing a financial institution and develop an appreciation of issues faced by them in the integrated global market environment.

Teaching and learning strategies

The course is presented in a combination of lectures and workshops. Lectures are supplemented with both printed and electronic learning materials and resources.

The objectives of this subject will be achieved by tackling both the theory and the practical applications of the material in lectures. Practical examples will be used to demonstrate how the theory and reality interact. Discussion of the issues will take place throughout the lecture.

This subject is presented in a two-hour lecture and one-hour tutorial format each week. The lecture is designed to explain and illustrate major concepts. The tutorial is designed to explore applications and problem solving. The class is conducted in a business like manner that is all communication both verbal and written is expected to be carried out in a profession and business like manner at all times.

The reading for each topic is listed in the lecture timetable. The lectures and reading list define the examinable content of this course.

Content

  • Structure of financial institutional, regulation and risks in banking
  • Key risk and return indicators in evaluation of bank performance
  • Management of interest rate risk and liquidity risk
  • Asset liability management
  • Capital adequacy and management of equity funds
  • Strategic planning and channels for future growth
  • Globalisation and international banking
  • Issues in prudential supervision and international taxation laws.

Assessment

Assessment item 1: Case Study (Group)

Objective(s): 1-4
Weighting: 25%
Task: The case study will assure objectives 1, 2, 3 and 4. Students will be assessed on their understanding of the theories and concepts associated with managing financial institutions.
Tutorial Reports (20%)
    1. Presentation & Submission of 'The Journal' plus the Diary see UTS Online.
    Briefly, the group must prepare a Journal related to two press articles about Financial Institutions. The work must be presented in an in class presentation in PowerPoint style and a written submission in a word document style with a title page, content pages, footnotes and bibliography. Students must submit both the PowerPoint presentation and the written document in both soft copy and hard copy on the day of the in class presentation.
    2.Diary
    Each group is required to keep a dairy of all meetings and tasks allocated and completed by group members. This diary is a compulsory requirement and should be submitted with the Journal above. The diary has a value of 2%. Failure to submit the diary for any reason will result in a deduction of these marks.

Assessment item 2: Mid-Semester Examination (Individual)

Objective(s): 1, 2
Weighting: 25%
Task: The mid semester examination assures objectives 1 and 2. It tests students' understanding of issues relevant to managing financial institutions in Australia.
    Mid-Semester Test- Questions and Problems will be based on materials covered in lectures and tutorial work in relation to Topics 1-8 and will examine learning objectives A,B.
    The format of the test will be multiple choice, short answer questions and problems. The test will be two and one half hours in duration.

Assessment item 3: Final Examination (Individual)

Objective(s): 1-4
Weighting: 50%
Task: The final examination test students' understanding of the theories, risk management and issues covered in the course. Students are required to demonstrate their knowledge of techniques for managing financial institutions. It assures objectives 1-4.
    The examination will cover all topics considered in class during the semester. It will comprise both problems and short written answers. The final examination will count 50% towards the overall course assessment and will be of three (3) hours duration. It will examine learning objectives A,B and C.

Required text(s)

Degabriele RA, Custom Publication, Financial Institution Management, McGraw Hill

Recommended text(s)

Hogan W, Avram K, Brown C, Degabriele, R., Ralston D, Skully M, Hempel G, Simonson D, Management of Financial Institutions, Wiley, 2004.

Indicative references

Bessis, J. Risk (2002) Management in Banking, 2nd edn, Wiley

Chew, D. (ed.), (1991), New Developments in Commercial Banking, Blackwell Finance, Massachusetts

Gardner, M.J. Mills, D.L. Cooperman, E.S. Managing Financial Institutions, An Asset/Liability Approach, Fourth Edition, 2000, Dryden Press

Gup, Kolari, Commercial Banking: The Management of Risk, 3rd edn, ISBN 978-0-471-46949-0

Heffernan, S. (2005), Modern Banking, Wiley England

Koch, T.W and MacDonald S. Bank Management 6th Edition Thomson

Sinkey Jr, J.F., (1998), Commercial Bank Financial Management, 5th edn, Maxwell MacMillan

Faculty of Business (2006), Guide to Writing Assignments, (available through UTS Online or at www.business.uts.edu.au/resources/guide.html)

Juttner & Valentine, The Economics & Management of Financial Institutions, Longman-Cheshire.

Lecture overheads

Copies of the lecture overheads are available for purchase from the UTS Union Store. The copies of the lecture overheads are to assist students in learning the subject material and should not be regarded as a substitute for reading the text or other material.

Other resources

In addition to the references above, students will be required to be aware of any developments that affect the finance industry. This can be achieved through reading the daily press and newsletters and publications issued by various financial institutions.

www.rba.gov.au/publ — look at this site for occasional papers - add /pu-op.html; and for other current publications.

http://jolis.worldbankimflib.org/JL/annualre.htm — this website will give you access to other interesting resource data centres on central banking.

www.bis.org/publ — this is the website for the principal international regulator, the Bank for International Settlements.