Course content
This course will analyze the main functions of banks and other financial institutions and review recent developments in the financial services industry. We will examine the functions performed by incumbent players in the following segments: extension of credit to businesses and consumers, payment processing, money management, and investment banking; attention will then turn to new industry players – fintech companies that are using digital technologies and big data to disrupt traditional players’ business models. Potential market size, product pricing and profitability of the new players will be evaluated.
It is assumed that students have good working knowledge of the basic theoretical and practical concepts of economics, accounting, and finance. The course is intended not only for those interested in careers within financial institutions, but also for those who wish to extend their institutional and industry specific knowledge.
Preliminary assignment:
Submit Entry Quiz - checking on basic accounting and finance knowledge; answer key and solutions will be provided;
Class 1: Financial institutions and their functions - introduction
Class 2: History of the U.S. banking industry; Case: The U.S. Banking Panic of 1933 and Federal Deposit Insurance
Class 3: Central Banking - Federal Reserve System; Monetary Policy and Its Tools;
Class 4: Analyzing bank financial statements. Key risks in the business of banking. Case: The Sudden Implosion of Silicon Valley Bank.
Class 5: Traditional lending and product pricing; Case: Santa Fe Trading Company;
Class 6: Innovations in lending and alternative finance (fintech); Case: Lending Club;
Feedback activity: Sample midterm exam with answer key and solutions provided; midterm will be in the same format as the final examination;
Class 7: Payment function: from the bill of exchange to Visa/MasterCard to Bitcoin
Class 8: Investments and money management; Case: Betting on Failure: Profiting from Defaults on Subprime Mortgages
Class 9: Review of investment banking segment; Case: The Tip of the Iceberg: JP Morgan Chase and Bear Stearns
Class 10: Regulation of financial industry; course review
See course description in course catalogue