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25751 Financial Institution Management

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2018 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

Requisite(s): ((25742 Financial Management OR 25746 Financial Management: Concepts and Applications) AND 25741 Capital Markets)
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.

Description

This subject is designed to provide an understanding of the investment process and to develop a set of tools for making investment and portfolio decisions. It provides an overview of the paradigms of modern portfolio theory, and a foundation for analysing the risks and returns of investment portfolios. Specific topics include the measurement of risk and return, the construction of efficient portfolios, the pricing of risk, equity valuation, market efficiency and investor behaviour.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. describe and give examples of sound and ethical banking practices
2. describe the various risks (including credit risk, interest rate risk and liquidity risk) faced by financial institutions and explain how they can be managed
3. assess the nature and management of bank capital
4. debate the intentions and effectiveness of banking regulations
5. apply financial management knowledge to banking practice
6. judge appropriate action in commercial banking situations

Contribution to the development of graduate attributes

This subject contributes to the degree by exposing students to the core principles of financial institution management. Financial intermediation plays an important role in the economy, and the subject explain how financial institutions fulfill that role. Students develop teamwork skills through collaborative in-class activities and group work. They also develop oral and written communication competencies via their individual and group assignments. The subject is aligned with the following graduate attributes:

  • Business knowledge and concepts
  • Critical thinking
  • Creativity and analytical skills
  • Communication and interpersonal skills
  • Business practice oriented skills

Teaching and learning strategies

This subject uses a broad range of teaching and learning strategies (including active strategies), such as lectures, guest speakers, case studies, a bank simulation game, and student presentations and discussions. Weekly activities include (1) in-class discussions, (2) lectures, (3) tutorials, and (4) bank simulation activities. In order to get the most of the subject, you should engage in all four activities every week. A detailed schedule of weekly activities, as well as all subject material, are available via UTSOnline. Communication and feedback are also encouraged via UTS Online.

In-class discussions: Current banking news will be made available to students, and will form the basis of discussions about current bank operations and prudential regulation. Case studies will also be provided for discussion.

Lectures: Students are expected to attend all lectures. Lectures introduce and describe the key concepts through a range of interactive and engaging learning experiences. There will be opportunities for collaborative student discussions in which students can share their insights. Occasionally, lectures will be complemented by guest lectures from industry practitioners. Prior to attending each lecture, students are asked to watch a summary video available via UTS Online

Tutorials: Tutorials provide an interactive opportunity to extend and apply the material taught in lectures. The tutorial for a given week is based on the lecture material from the previous week. Tutorials commence in Week 2, and students are expected to prepare for them by completing the problems independently at home.

Bank simulation: This is a teaching tool for Finance students who intend to pursue careers in the banking industry. It is available as a dynamic internet?based simulation. The bank simulation that runs from Week 4 to Week 9 is a comprehensive exhibition of a bank’s operation and prepares students for a better understanding of the risk concepts taught in Week 5 to 11. Working in teams, students will manage a simulated commercial bank over several quarters. They will be required to respond to changing banking and economic conditions, and will see the effects of their decisions in realistic scenarios. Weekly feedback will be provided from Week 4 onwards. The students receive feedback that matches real world conditions as students make sequential decisions for real bank operations under uncertainty, competition and economic changes. Each week, the students have a specific task to complete that is aligned with the learning objectives. At the end of term, students write a final report and present their work. Students receive feedback based on the ability to set targets and compare these targets with outcomes over time and over banks, the ability to incorporate feedback and self-reflection.

UTS Online: UTSOnline is used to disseminate learning resources, including the subject outline, lecture slides, tutorial exercises, assignment briefs, announcements, and any supplementary information. Students are responsible for checking UTSOnline regularly. All announcements posted on UTSOnline will also be emailed to students, to ensure that they stay informed.

Content (topics)

  • Introduction to the financial system, financial institutions and financial instruments
  • The special nature of financial institutions
  • Risks and regulation in banking
  • Financial statement analysis, evaluation of bank performance
  • Strategic planning and sustainability
  • Loan pricing and cost of funds
  • Credit risk, interest rate risk, liquidity risk, market risk, operational risk, and sovereign risk
  • Capital adequacy
  • The Basel regulations and other regulations

Assessment

Assessment task 1: Assignment (Group)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3, 4, 5 and 6

Weight: 25%
Criteria:
  • Accuracy of the computational results done in Excel
  • Correct interpretations of the results
  • Presentation of the report

Assessment task 2: Assignment (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3, 4, 5 and 6

Weight: 35%
Criteria:
  • Accuracy of response
  • No marks will be given for partially correct answers

Assessment task 3: Final Exam (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3, 4, 5 and 6

Weight: 40%
Length:

The final exam will be of 2 hours duration plus 10 minutes reading time. The exam will include a portfolio of short answer questions and more analytical questions involving computations (in line with SLOs 1,2 and 3). The exam will also include broader questions and smaller case studies (in line with SLOs 4, 5, and 6). These require students to write small essays, debate banking issues and use financial management approaches to outline banking decisions.

Criteria:
  • Accuracy of calculations and interpretations
  • Marks will be given for partially correct answers

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Required texts

Hull, J.C., 2015, Risk Management and Financial Institutions. 4th edition, Wiley, Hoboken, New Jersey.

Other resources

Other references

  • Lange, H., Saunders, A., and Cornett, M.M., 2015, Financial Institutions Management, 4th edition, McGraw-Hill, North Ryde
  • Westpac, Annual Report, 2015, http://www.westpac.com.au
  • Basel Committee on Bank Supervision: www.bis.org
  • Australian Prudential Regulation Authority: www.apra.gov.au
  • Additional handouts will be provided on UTSOnline