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Money and Banking: Course outline

Course description

The course is designed to equip students with the comparative knowledge of a financial system and its regulatory framework in Pakistan and in a developed economy. On completion of the course, the students should be able to demonstrate an understanding of the subject matter and financial environments in Pakistan. This course offers a comprehensive exploration of the revolutionary developments occurring in the world's financial markets and institutions i.e., innovation, globalization, and deregulation with a focus on the actual practices of financial institutions, investors, and financial instruments.

Learning outcome

1) To understand the money and banking functions.

2) To develop skills to analyze and design and efficient business relation with banks.

3) To learn about the decision-making process in the field of banking.

4) To learn about the fundamental ideas underlying the preparation of financial instruments.

5) To learn the profession of banking and its specialized fields.

text book

Course content

1          Functions and Roles of the Financial System in the Global Economy

•           Functions of global financial system

•           Types of financial markets

•           Financial markets in Pakistan

2          Financial Assets, Money, Financial Transactions, and Institutions

•           Characteristics and types of financial assets

•           Lending and borrowing of financial instruments

•           The value of money and inflation

•           Importance of financial institutions

•           Financial intermediaries and other financial institutions

3,4       Introduction to Money Market

•           Characteristics of the money market

•           Types of money market securities

•           Pattern of interest rates in the money market

•           Money market instruments by SBP

5,6       Money Market Instruments               

•           Certificates of Deposit, Eurocurrency Deposits

•           Bankers’ Acceptance, Commercial Papers

•           Federal agency securities

•           Market Participants (dealers)

•           Role of Primary Dealers

•           Role of Government Agencies

7,8       The Roles and Services of the Federal Reserve (State Bank of Pakistan)

•           The roles of central bank

•           The goals and channels of central bank

•           How SBP is organized

•           The key focus of central bank monetary policy – interest rate, reserves

Course content

9-10     The Tools and Goals of Central Bank Monetary policy

•           Credit control and its types

•           Interest rate targeting

•           Economic goals and the trade-offs

•           Limitations of monetary policy

11-12   The Commercial Banking Industry and SBP Regulations   

•           The structure of commercial banking

•           Fund management institutions

•           Mutual funds, life insurance companies, medical insurance companies, pension funds, saving companies

•           Consumer financing

13-14   Business Borrowing (Capital Markets)

•           Bonds and stock markets

•           IPO's and secondary markets – role of stock exchanges (KSE)

•           Types of corporate stocks

•           Ist, 2nd, and 3rd markets

•           Market efficiency

•           International exposure through ECNs, and NASDAQ                             

15        Consumer Lending and Borrowing

•           Consumers as lenders, borrowers

•           Debit and credit cards

•           Factors considered in making consumer loans

•           Buying power, social differences, and the role of consumer financing in Pakistan