25751 Financial Institution Management
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particular session, location and mode of offering is the authoritative source
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Subject handbook information prior to 2024 is available in the Archives.
Credit points: 6 cp
Subject level:
Postgraduate
Result type: Grade and marksRequisite(s): 25741 Capital Markets
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.
Anti-requisite(s): 25890 Foundations in Banking
Description
In this subject, students learn about the business models of banks and other financial institutions and the processes employed by them for asset-liability management, cash flow management and risk management. They also investigate how these processes allow financial institutions to meet internal, professional, regulatory and public standards in an increasingly dynamic and challenging environment. Using bank simulations, the subject develops a holistic understanding of the risks and complexities faced by financial institutions, and students learn how to make decisions under uncertainty. They also study how financial institutions learn from the observed outcomes of their decisions, as well as from the economy and the behaviour of their competitors. The subject develops measures for interest rate risk, market risk, credit risk, operational risk and liquidity risk, and introduces students to the key strategies for hedging and managing these risks.
Subject learning objectives (SLOs)
| 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 explains 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:
- Intellectual rigour and innovative problem solving
- Communication and collaboration
- Social responsibility and cultural awareness
- Professional and technical competence
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. 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 the learning management system. Communication and feedback are also encouraged via the learning management system.
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. Before attending each lecture, students are asked to watch a summary video.
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.
Learning Management System: The learning management system 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 the system regularly. All announcements posted 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: | 30% |
| Criteria: |
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Assessment task 2: Assignment (Individual)
| Objective(s): | This addresses subject learning objective(s): 1, 2, 3, 4, 5 and 6 |
|---|---|
| Weight: | 60% |
| Criteria: |
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Assessment task 3: In-class quizzes (Individual)*
| Objective(s): | This addresses subject learning objective(s): 1, 2, 3, 4, 5 and 6 |
|---|---|
| Weight: | 10% |
| Criteria: |
*Note: Late submission of the assessment task will not be marked and awarded a mark of zero. |
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Required texts
Davis, K, Bank and Financial Institution Management in Australia, www.kevindavis.com.au/BankingBook/Chapter%20List.htm
Other resources
Other references
- Westpac, Annual Report, 2022, 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 Canvas