Run by Bangor Business School
20 Credits or 10 ECTS Credits
Semester 1 & 2
Organiser: Prof Jon Williams
Overall aims and purpose
This module examines the main theoretical and practical issues concerning banking business. In particular, the module covers the theory of the banking firm by considering all aspects of the bank’s balance sheet in addition to regulation, structural and environmental issues that affect the bank’s strategic decision-making and risk behaviour. After completing the module, students should be familiar with how to measure, manage and maximise the bank’s value and its risks, and have developed understanding of management strategies and the importance of risk management and risk culture in banking.
The content may include but will not be limited to the following topics: The special nature of the banking firm Asset and Liabilities Management (ALM) Liquidity management Capital theory, management and the regulation architecture Fundamental drivers of risks and their measurement Business models and forces of change Competition in banking Business and consumer lending Managing value at risk. Essentials of credit risk analysis Credit risk management Managing the investment portfolio
C- to C+
C- to C+ Demonstration of the required knowledge and techniques but with mistakes and little development of the subject beyond lecture material.
B- to B+ Clear understanding of the subject, together with evidence of investigation and understanding of the research literature, but with some theoretical or practical minor errors.
D- to D+ Demonstration of the required knowledge and techniques but with significant mistakes and little development of the subject beyond lecture material.
A- to A+ Excellent grasp of the concepts and techniques together with significant evidence of engagement and understanding of the research papers in this area.
Examine how banks measure different risks.
Evaluate the market forces, competitive conditions and regulatory requirements that are shaping bank business models and strategies as well as the banking and wider financial industry.
Evaluate the asset-liability management (ALM) process in modern banking firms.
Discuss the main theories and practices underlying modern bank capital management.
Appraise the main theoretical and practical issues concerning banking business.
Understand how to measure, manage and maximise the bank’s value.
Develop a critical understanding of the fundamental drivers of risks and risk culture in banking.
Evaluate the processes and techniques in credit risk and liquidity management methods that banking firms use.
|Examination (semester 1)||30|
|Examination (semester 2)||30|
|S1 Group Assignment||20|
Teaching and Learning Strategy
|Practical classes and workshops||
Practical classes and workshops delivered through Blackboard.
One 2-hour lecture per week.
To review lectures, read supporting materials, and reflect upon each topic.
- Literacy - Proficiency in reading and writing through a variety of media
- Numeracy - Proficiency in using numbers at appropriate levels of accuracy
- Computer Literacy - Proficiency in using a varied range of computer software
- Self-Management - Able to work unsupervised in an efficient, punctual and structured manner. To examine the outcomes of tasks and events, and judge levels of quality and importance
- Exploring - Able to investigate, research and consider alternatives
- Information retrieval - Able to access different and multiple sources of information
- Inter-personal - Able to question, actively listen, examine given answers and interact sensitevely with others
- Critical analysis & Problem Solving - Able to deconstruct and analyse problems or complex situations. To find solutions to problems through analyses and exploration of all possibilities using appropriate methods, rescources and creativity.
- Presentation - Able to clearly present information and explanations to an audience. Through the written or oral mode of communication accurately and concisely.
- Teamwork - Able to constructively cooperate with others on a common task, and/or be part of a day-to-day working team
- Argument - Able to put forward, debate and justify an opinion or a course of action, with an individual or in a wider group setting
- Self-awareness & Reflectivity - Having an awareness of your own strengths, weaknesses, aims and objectives. Able to regularly review, evaluate and reflect upon the performance of yourself and others
Subject specific skills
- skills in recording and summarising transactions and other economic events; preparation of financial statements; analysis of the operations of business (for example, decision analysis, performance measurement and management control); financial analysis and projections (for example, analysis of financial ratios, discounted cash flow analysis, budgeting, financial risks)
- knowledge of theories and empirical evidence concerning financial management, risk and the operation of capital markets (in cases of degrees with significant finance content).
- A knowledge of the major theoretical tools and theories of finance, and their relevance and application to theoretical and practical problems (e.g. concept of arbitrage and examples of its use; financial mathematics and capital budgeting criteria; informational efficiency; optimal risk sharing; portfolio theory; asset pricing models and the valuation of securities; cost of capital; derivative pricing; risk management; information asymmetry; principal agency relationships; signalling; Fisher separation and capital budgeting criteria; behavioural finance; term structure and the movement of interest rates; determination of exchange rates and financial intermediation).
- An ability to interpret financial data including that arising in the context of the firm or household from accounting statements and data generated in financial markets. The interpretation may involve analysis using statistical and financial functions and procedures such as are routinely available in spreadsheets (eg Microsoft Excel) and statistical packages. It may assume the skills necessary to manipulate financial data and carry out statistical and econometric tests (e.g. estimation and interpretation of asset pricing models; financial modelling and projections; event studies and residuals analysis; elements of time series analysis, such as serial correlation mean reversion, and stochastic volatility).
- An understanding of the relationship between financial theory and empirical testing, and application of this knowledge to the appraisal of the empirical evidence in at least one major theoretical area. The appraisal should involve some recognition of the limitation and evolution of empirical tests and theory (eg the efficient markets hypothesis; anomalies; pricing of derivatives and other securities; bond portfolio management; exchange rates; raising capital and capital structure).
- An understanding of the financing arrangements and governance structures of business entities, and an appreciation of how theory and evidence can be combined to assess the effectiveness and efficiency of such arrangements (e.g. decisions as to sources of finance and financial structure; the pricing of corporate securities; the market for corporate control; corporate governance structures and mechanisms; financial planning and international dimensions of finance).
- An understanding of the factors influencing the investment behaviour and opportunities of private individuals (bonds, equities, and derivatives; risk aversion; risk/return trade-offs; portfolio management and performance measurement; pensions and long term savings; the tax treatment of savings and investments; international diversification; forex risk; objectives of and constraints on institutional investors and advisors).
- An understanding of financial service activity in the economy, and an appreciation of how finance theory and evidence can be employed to interpret these services (for example, information asymmetry, adverse selection and moral hazard could be employed to analyse the fundamental nature of services, such as insurance, pensions, bank lending and consumer credit, and also explore fundamental problems arising in such financial service provision. Efficient market hypothesis could be used to explore evidence for fund manager performance and the effectiveness of equity and bond saving services).
- An ability to understand financial statements, and a basic appreciation of the limitations of financial reporting practices and procedures (eg financial statement analysis; the relation between cash flow accounting and accrual accounting; discretionary accounting practices).
- Problem solving and critical analysis: analysing facts and circumstances to determine the cause of a problem and identifying and selecting appropriate solutions.
- Conceptual and critical thinking, analysis, synthesis and evaluation.
- Commercial acumen: based on an awareness of the key drivers for business success, causes of failure and the importance of providing customer satisfaction and building customer loyalty.
- Numeracy: the use of quantitative skills to manipulate data, evaluate, estimate and model business problems, functions and phenomena.
Resource implications for students
Students may want to purchase supporting text book.
Bank Management, 8th ed. by Timothy W. Koch and S. Scott MacDonald. Published by Cengage Learning.
Introduction to Banking, 2nd ed. by Barbara Casu, Claudia Girardone and Philip Molyneux (2015). Published by Pearson.
Courses including this module
Compulsory in courses:
- NR33: BA Banking/Italian year 4 (BA/BIT)
- NR34: BA Banking/Spanish year 4 (BA/BSP)
- NR31: BA French/Banking year 4 (BA/FRB)
- NR32: BA German/Banking year 4 (BA/GB)
- NN44: BSc Accounting and Banking with International Experience year 4 (BSC/ABIE)
- NN43: BSc Accounting and Banking year 3 (BSC/ACCB)
- NN46: BSc Accounting and Banking (4 year with Incorp Found) year 3 (BSC/ACCB1)
- NN3F: BSc Accounting and Banking year 3 (BSC/ACCBF)
- 8V55: BSc Banking and Finance (with International Experience) year 3 (BSC/BFIE)
- N391: BSc Banking and Finance year 3 (BSC/BFIN)
- N39B: BSc Banking and Finance (4 year w Incorporated Foundation) year 3 (BSC/BFIN1)
- N39F: Banking and Finance year 3 (BSC/BFINF)
- N324: BSc Banking and Finance (Bangor International College) year 3 (BSC/BICBF)
Optional in courses:
- NN14: BA Business Stud & Finance (with International Experience) year 4 (BA/BSFIE)
- N107: BA Business year 3 (BA/BUS)