This document provides an overview and syllabus for a course on Money, Banking, and Financial Markets. The course will examine how financial markets and institutions work, and the role of money in the economy. It will cover topics like interest rates, monetary policy, banking, and international financial systems. The goal is for students to understand the impact of monetary activities on the economy and the structure and regulation of financial systems. The course will be evaluated through tests, assignments, and a closed-book final exam.
This document provides an overview and syllabus for a course on Money, Banking, and Financial Markets. The course will examine how financial markets and institutions work, and the role of money in the economy. It will cover topics like interest rates, monetary policy, banking, and international financial systems. The goal is for students to understand the impact of monetary activities on the economy and the structure and regulation of financial systems. The course will be evaluated through tests, assignments, and a closed-book final exam.
This document provides an overview and syllabus for a course on Money, Banking, and Financial Markets. The course will examine how financial markets and institutions work, and the role of money in the economy. It will cover topics like interest rates, monetary policy, banking, and international financial systems. The goal is for students to understand the impact of monetary activities on the economy and the structure and regulation of financial systems. The course will be evaluated through tests, assignments, and a closed-book final exam.
This document provides an overview and syllabus for a course on Money, Banking, and Financial Markets. The course will examine how financial markets and institutions work, and the role of money in the economy. It will cover topics like interest rates, monetary policy, banking, and international financial systems. The goal is for students to understand the impact of monetary activities on the economy and the structure and regulation of financial systems. The course will be evaluated through tests, assignments, and a closed-book final exam.
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ECON F312:
Money, Banking and Financial
Markets I Semester 2020-21 BITS Pilani The Impact of COVID-19 on Financial Markets, Banking Systems, and the Overall Economy
• COVID-19 emerged as a black swan event that stifled the
global economy. • COVID-19 resulted in social isolation within countries, closed borders, loss of business, loss of employment, industry-wide shutdowns, and many more adverse economic effects. • Governments across the globe initiated fiscal and monetary stimulus programs to combat the damaging economic effects caused by the virus. • Volatility in the financial markets spiked in the aftermath of the crisis, most likely due to difficulty in estimating the extent of the economical damage caused by this global event, which is still unfolding BITS Pilani, Pilani Campus The Impact of COVID-19 on Financial Markets, Banking Systems, and the Overall Economy
• The extent of the downturn could be felt over many
years. • The Impact of COVID-19 on Financial Markets, Banking systems, and the Overall Economy has become one of most debatable topic in the literature of Macroeconomics. • The impact of fiscal and monetary policy responses • The impact on consumer spending and behavioral Economics • The impact on savings and Investments. • The impact on financial markets • Investor sentiment and Behavioral Finance. • Changes to capital structure BITS Pilani, Pilani Campus Introduction
• The field of financial markets and financial institutions is an
exciting area. • Not only you will develop skills that will be valuable in your career, but also you will gain clear understanding of events in financial markets and institutions you frequently hear in the news media. • On the evening news you have just heard that the stock market has been booming. • Does this mean that interest rates will fall so that it is easier for you to finance the purchase of a new computer system for your small business?
BITS Pilani, Pilani Campus
Introduction
• Will the economy improve in the future so that it is a
good time to build a new house in future or add to the to the portfolio now? • Should we invest in bonds or gold? • Should you try to raise funds by issuing stocks or bonds, or instead go to the bank for a loan? • If you import goods from abroad, should you be concerned that they will become more expensive or cheap?
BITS Pilani, Pilani Campus
Interest rates and Financial Development and Economic Growth • Interest rates are important on a number of levels. • On personal level, high interest rate could deter you from buying a car or house • It could encourage you to buy more bonds. • On the contrary, high interest could discourage the economic business and low interest rate encourage the business • Because changes in the interest rate have important effect on individuals, financial institutions, business and over all economy, it is important to explain fluctuations. • Hence, understanding interest rate and its fluctuations is one of the objectives of this course.
BITS Pilani, Pilani Campus
Business news and financial markets • Sensex is trading in Green • BSE Sensex is increased to 38,528 • Sensex jumps 477 pts on 18th of Aug • The Fed cut rates for the second time since 2008. • Asian markets fell in early trading • Gold and silver prices are decreasing . • RBI cuts repo rate by 40 bps for 3rd time in 2020. • Post the policy announcement, the repo rate stands at 4.00 and reverse repo at 3.35 BITS Pilani, Pilani Campus Questions on its impact on financial markets
• What effect might this have on the interest rate in the
economy? • What effect it will have on the interest rate on an car loan and house loan you finance? • How does the monetary policy help economic growth? • How savings will help economy to grow? • How the foreign markets affect the Indian markets? • How does the volatility in the stock market affect the economic growth? BITS Pilani, Pilani Campus Nature and Scope
• The course will provide answer to the above said
questions by examining how financial markets (bond, stock and foreign markets) and financial institutions (banks, insurance companies and other institutions) work
and by exploring the role of money in the economy.
BITS Pilani, Pilani Campus
Learning Objectives • To study the mechanisms of debt market and role played by interest rate • To study the dynamics and money market and stock market • To explore the structure of financial system and understand the reasons financial crisis • To analyze the role of central banks and commercial banks in regulation money supply in the economy. • To discuss the role of central banks in the conduct of monetary policy • To study the foreign exchange rate dynamics and foreign exchange risk • To discuss the risk management techniques for financial institutions. BITS Pilani, Pilani Campus Upon successful completion of this course, the student will be able to: • Acquire and demonstrate analytical and problem solving skills within money, banking, and financial market concepts. • Able to assess how monetary activities affect an economy. • Describe the structure of financial markets, the factors that shape them, and how they are regulated. • Able to explain the role of financial markets in the economy. • Able to explain the role of banks and other financial intermediaries. • Analyze how the central bank affects the economy. • Assess how a financial crisis happens and how policy makers should respond. • Can quantify various market and financial risk related to financial markets and institution operation. BITS Pilani, Pilani Campus Money, Banking, and Financial Markets
• To examine how financial markets
such as bond, stock and foreign exchange markets work • To examine how financial institutions such as banks and insurance companies work • To examine the role of money in the economy
BITS Pilani, Pilani Campus
Overview of the Course • Monetary System, Banking System and Financial System as a whole plays a vital role in the national economy. • The total quantity of money and the rate at which that quantity grows overtime have important implications for the interest rates, inflation and economy’s overall growth. • Central Bank of the country plays an important role to regulate the quantity of money and oversee the health of the banking system and entire financial system. • The Finance Ministry have the responsibility of ensuring financial stability of the country. • At this point, we have a little knowledge about the functioning of all the system.
BITS Pilani, Pilani Campus
Course Content in brief and modules Module I: Financial System, Financial Markets, Rational Expectation Hypothesis, Understanding interest rates, Behavior of interest rates, Risk and Term structure, Efficient Market Hypothesis, Module II: Money, Money market, Monetary policy, Central Bank, Conduct of monetary policy: goals and targets, Monetary transmission mechanism Module III: Banking, The banking firm, Banking and management of financial institutions, Banking industry; structure and competition, Economic analysis of banking regulation, Indian Banking Module IV: International Financial system and risk management in Financial institutions, hedging with financial derivatives and Risk management in Foreign exchange markets. BITS Pilani, Pilani Campus Text Book Mishkin, Frederic S, Stanley G Eakins, Tulsi Jayakumar and R K Pattnaik “Financial Markets and Institutions, Pearson Education, Eighth Edition, 2017.
BITS Pilani, Pilani Campus
Evaluation Scheme
Duration Weightage Nature of
Component (Mins) (%) Date component Test I 30 15 10/9 to 20/9 (TBA) Open Book Test II 30 15 9/10 to 20/10 (TBA) Open Book Test III 30 15 10/11 to 20/11 (TBA) Open Book Continuous Evaluation -- 15 + 10 Continuous Open Book Comprehen sive Exam 120 30 03/12 (FN) Closed Book