Financial Institutions and Market in the BBA program (Semester V) at Pokhara University provides a comprehensive understanding of the role and functioning of financial institutions and markets in a market economy. It covers key topics such as the functions of financial markets, central banking, interest rate structures, and the operations of money, bond, and stock markets.
Financial Institutions and Market also examines the roles of commercial banks, investment companies, insurance firms, and pension funds, with a focus on their financial statements, risk management, and market environment. Special emphasis is placed on understanding the Nepalese financial system, equipping students with the skills to analyze financial institutions and market dynamics effectively.
Table of Contents
Course Objectives of Financial Institutions and Market”
The objective of Financial Institutions and Market is to provide the student with the conceptual framework necessary to analyze and comprehend the current opportunities and problems confronting managers of financial markets and institutions.
Course Description of Financial Institutions and Market”
Financial Institutions and Market provides broad overview of the role of financial institutions and markets in a market economy. Student will have an opportunity to study important aspects of financial markets such as the term structure of interest rates, stocks, and principals of derivatives. Further, they will also study important financial institutions such as commercial banks, investment banks, insurance companies, and mutual funds. They will also study the role of central banks in the economy.
Course outcomes
By the end of this course, students should be able to:
- understand fundamental concepts of financial institutions and markets including the role of financial system in the economy;
- describe the structure and function of the central bank including the tools it uses to affect the economy;
- discuss theories that describe the term structure of interest rates;
- discuss money markets, bond markets and stock markets related to pricing;
Understand a stylized bank’s balance sheet and discuss how risks are managed in banks. Describe the nature, financial statements, management priorities, and business environment of insurance companies, investment banking, and Investment companies
Course Contents
Unit I: The Role of Financial Institutions and Markets – 4 hours
Meaning of financial markets and institutions; functions of the financial markets; function performed by financial institutions; and classification and diversity of financial markets.
Unit II: Central Banking – 4 hours
Brief history of central bank; objectives of central bank; functions of central bank; role of central bank in the economy; monetary tools of the central bank; money and the behaviour of the central bank.
Unit III: The Level and Structure of Interest Rates – 5 hours
The structure of interest rates; the level of interest rate; theories of the term structure; and movement of interest rates over time.
Unit IV: The Money Market – 5 hours
Concepts of money market; money market instruments; the valuation of debt instrument; international money market.
Unit V: The Bond and Stock Market – 10 hours
Bond Market Participants; corporate bond market; municipal bond market; mortgage market. Stock market securities; common stock and preferred stock, general organization of the stock market; primary and secondary stock markets: primary markets, secondary markets and stock market indexes.
Unit VI: Commercial Banks – 10 hours
Definition of a commercial bank; size, structure, and composition of the industry; liquidity management of commercial banks; management of bank profitability; management of assets and liabilities, and risk management of commercial banks.
Unit VII: Other Financial Institutions – 10 hours
General features of investment companies; types of investment companies; strategies for mutual funds; mutual fund performance.risk and return for insurance companies; types of insurance companies; life insurance companies; and property and liability insurance companies. Pension funds, private pension fund plans, public pension fund plans, pension funds regulation, provident fund in Nepal.
Basic Texts
- Saunders, A. and M. M. Cornett. Financial Markets and Institutions. McGraw-Hill Higher Education.
- Madura J. Financial Market and Institution. Cengage Learning South-Western.
References
- Michael Baye and Jansen: Money, Banking and Financial Market, A.I.T.B.S.
- Meir Kohn: Financial Institute and Market, Tata McGraw- Hill Bhandari, D. B. Financial Institutions and Markets.Asmita Book Publishers & Distributors (P) Ltd