BUS 423
Financial Institutions Fall 2005-06
HACETTEPE UNIVERSITY
Department of Business Administration
BUS423 Financial Institutions
(Wednesday 9:20 – 12:05)
INSTRUCTOR:
Halit Gönenç, Ph.D., Associate Professor of Finance
Office: Department of Business Administration
E-Mail:
Office Hours: Tuesday 9:30 – 12:00 or email for an appointment. I will be in my office on Monday-Friday from 9:15-16:30 with a high probability, except at lunchtime and when I am teaching. I generally reply to e-mail promptly.
Web Site: Http://yunus.hacettepe.edu.tr/~halit/
MATERIALS:
Required Text:
Financial Institution Management by Marcia Millon Cornett and Anthony Saunders (2003), 3rd Ed, McGraw Hill.
PREREQUISITES: Better understanding will be accomplished if student took and passed Bus307 and Bus308.
COURSE DESCRIPTION: Money and Finance; Financial Markets; Financial Instruments; Interest Rates; Commercial Banks; Other Financial Intermediaries; Regulation of Financial System; Functions of Central Bank. The objectives, functions, policies, organizational practices, and government regulations of financial institutions; Managing Interest Rate Risk.
COURSE OBJECTIVES: The objective of this course is to provide materials, and exercises that will allow the student to develop an understanding of how financial institutions function from a management viewpoint. The course provides introductory through intermediate level material on such topics as credit risk, liquidity risk, and interest rate risk issues. These topics are integrated with an introduction to the dynamic environments of financial
institutions and the financial markets involved.
CLASS POLICIES:
Attendance: Students are expected to attend every class and to bring the textbook to each class.
COURSE GRADE:
Mid Term Exam (30%)
Project (25%)
Comprehensive Final Exam (45%)
Exams: Composed of multiple choice questions.
Project:
Each student will be assigned to work on a project independently. This project will involve the financial analysis of a commercial bank operated in Turkish Financial System. A student should completely analyze the profitability, the strengths and weaknesses of his/her bank using comparative and trend ratio analysis based on DUPONT model. A Student who does not complete his/her project will get automatically a D, even though his/her average grade is better than a D. Final Report for the Project due is December 28, 2005.
In two or three weeks after the classes start, every student will be informed which bank he/she will be studying on and where he/she will find the financial statements and some ratios for this bank. You will have to use the knowledge that you have got in Financial Management course for the financial ratio analysis.
You must use a comparative and trend ratio analysis for this project. You will get historical information for your bank from the related web site. You will also be shown where you can find the information for the commercial bank sector in Turkey.
SUGGESTIONS FOR SUCCESS IN BUS425:
* In the past I have found it to be extremely helpful if students review their notes each day to make certain they understand the concepts and methodologies completely (i.e., review the logic behind each step when we are covering problem oriented material).
* I urge students to utilize my office hours or use E-mail for questions they have. I am willing to help the student who has made an honest attempt at the material. I have little or no time for the students who tries to use my time as a replacement for his/her own preparation time.
READING ASSIGNMENTS, HOMEWORK ASSIGNMENTS
Date Reading Assignment to be Completed Prior to Class
Week 1
Oct 5 Introduction,
Week 2
Oct 12 Chapter 1 (Why Are Financial Intermediaries Special?)
Financial Markets: The Fundamental
Week 3
Oct 19 Evaluating the Performance of Financial Intermediaries
Week 4
Oct 26 Chapter 2 (The Financial Services Industry: Depository Institutions)
Week 5
Nov 2 Holiday (Ramazan Bayramı)
Week 6
Nov 9 Chapter 11 (Credit Risk: Credit Analysis and Lending Risk)
Week 7
Nov 16 Mid Term Exam
Week 8
Nov 23 Chapter 12 (Credit Risk: Loan Portfolio Risk)
Week 9
Nov 30 Chapter 17 (Liquidity Risk)
Week 10
Dec 7 Chapter 18 (Liability and Liquidity Risk)
Week 11
Dec 14 Chapter 20 (Capital Adequacy)
Week 12
Dec 21 Chapter 8 Management of Interest Rate Risk I
Week 13
Dec 28 Chapter 9 Management of Interest Rate Risk I and Chapter 18 Management of Interest Rate Risk II
Week 14
Jan 4 Chapter 9 Management of Interest Rate Risk II, Make up Exam and Review
Week 15
FINAL EXAMINATION: January 16-29, 2006
* Please note this is a tentative schedule and changes may be necessary as the semester unfolds.