Course Overview

This intensive Money and Banking course provides students with a comprehensive understanding of the financial system, monetary policy, and the operations of central banks. Over two weeks, students will explore the foundational principles of money, financial markets, and financial institutions, progressing to advanced topics such as interest rate structures, risk management, and the role of central banks in economic stability.

The course examines the time value of money, financial instruments, and bank management practices, while integrating real-world case studies to apply theoretical concepts. Particular emphasis is placed on monetary policy tools, exchange rate management, and the role of central banks like the Federal Reserve, , and European Central Bank.
Through a combination of lectures, interactive discussions, problem-solving exercises, and group projects, students will develop analytical and critical thinking skills essential for understanding and navigating today's dynamic financial systems. By the end of the course, students will be equipped to analyze financial markets, assess monetary policies, and evaluate the mechanisms linking money, banking, and the broader economy.
This course fosters both theoretical knowledge and practical application, preparing students for leadership roles in finance, banking, and policy analysis.

Learning Outcomes

By the end of this course, students will be able to:
1. Describe the Components of Financial Systems
o Identify the six parts of the financial system and explain their interconnections, including the role of money, financial instruments, and markets.
2. Apply Time Value of Money Concepts
o Calculate future value, present value, and interest rates using financial tools to evaluate monetary payments and investment decisions.
3. Analyze Risk and Return Trade-offs
o Distinguish between systematic and idiosyncratic risk, measure risk premiums, and evaluate interest rate structures (e.g., expectations theory and liquidity premium).
4. Evaluate the Role of Financial Institutions
o Explain the structure and functions of depository and non-depository financial institutions and assess how they manage risks (liquidity, credit, and interest rate risks).
5. Assess Central Bank Operations and Policies
o Analyze the balance sheet of central banks and evaluate monetary policy tools, both conventional (e.g., interest rates) and unconventional (e.g., quantitative easing).
6. Examine Exchange Rate Policies
o Explain the mechanics of fixed and flexible exchange rate systems and assess their implications for monetary policy and financial stability.

7. Solve Real-World Financial Problems
o Apply theoretical knowledge to practical scenarios using case studies, group projects, and financial analysis exercises.
8. Present Financial and Policy Analyses
o Communicate financial findings effectively through written reports and group presentations, demonstrating critical thinking and analytical skills.

Course Content

The course will be conducted over 10 days (4.2 hours/day) as follows:
Week 1: Foundations of Money, Banking, and Financial Systems
• Day 1: Introduction to Money and the Financial System
o The Six Parts of the Financial System
o The Five Core Principles of Money and Banking
o Functions of Money and the Payments System

o Commodity Money vs. Fiat Money: Historical and Modern Perspectives
o Emerging Trends: Electronic Payments, Digital Currencies, and Fintech Innovations
• Day 2: Financial Markets and Interest Rates
o Types and Characteristics of Financial Instruments
o The Role of Financial Markets and Financial Institutions
o Time Value of Money: Future Value, Present Value, and Compound Interest
o Real vs. Nominal Interest Rates
o Applications of Present Value: Net Present Value (NPV) and Internal Rate of Return (IRR)
• Day 3: Understanding Risk and Interest Rate Structures
o Defining Risk: Systematic vs. Idiosyncratic Risk
o Measuring Risk: Risk Premiums, Expected Value, and Trade-offs
o Term Structure of Interest Rates:
▪ Expectations Theory
▪ Liquidity Premium Theory
o Practical Applications: Risk-Return Analysis and its Role in Financial Decisions
• Day 4: Financial Institutions and Bank Management
o Financial Intermediaries: The Role of Banks in Reducing Information Costs and Managing Asymmetries
o The Balance Sheet of Commercial Banks: Assets, Liabilities, and Bank Capital
o Managing Key Risks: Liquidity Risk, Credit Risk, and Interest-Rate Risk
o Non-Depository Financial Institutions: Insurance Companies, Pension Funds, and Investment Firms
• Day 5: Midterm Exam and Case Study Discussion
o Midterm Exam (1.5 hours): Covering Days 1–4 topics
o Case Study Discussion: Analysis of financial markets, risk structures, or bank management practices

Week 2: Central Banks, Monetary Policy, and Exchange Rate Systems
• Day 6: Central Banks and the Money Supply Process
o Origins and Roles of Central Banks: Stability and Monetary Oversight
o Central Bank Balance Sheets: Components and Functions
o Changing the Monetary Base: Tools to Expand or Contract the Money Supply
o Deposit Expansion Multiplier and the Money Creation Process
• Day 7: Monetary Policy – Stabilizing the Domestic Economy
o Conventional Policy Tools of Central Banks:
▪ Federal Reserve and European Central Bank Frameworks
o Linking Policy Tools to Objectives: The Taylor Rule and Inflation Targeting
o Unconventional Monetary Policies: Quantitative Easing and Negative Interest Rates
o Case Study: Effectiveness of Monetary Policy in Economic Stabilization
• Day 8: Exchange Rate Policy and the Role of Central Banks
o Exchange-Rate Policy and its Link to Domestic Monetary Policy
o Mechanics of Exchange Rate Management: Fixed vs. Flexible Exchange Rates

o Costs, Benefits, and Risks of Fixed Exchange-Rate Regimes
o Case Study: Exchange Rate Management in Emerging Economies
• Day 9: Group Project Presentations
o Student-led presentations analyzing:
▪ Central bank monetary policies
▪ Risk management frameworks in financial institutions
o Instructor feedback and discussion
• Day 10: Final Exam and Course Wrap-up
o Final Exam (1.5 hours): Cumulative evaluation of Weeks 1 and 2 topics
o Course Wrap-up: Review of Key Concepts and Practical Takeaways

Instructional Method

Lectures:
• Core theoretical concepts will be delivered through structured lectures, providing foundational knowledge on financial systems, monetary policy, risk management, and central bank operations.
Interactive Discussions:
• Class discussions will focus on analyzing real-world financial news, case studies, and policy changes to deepen understanding and encourage critical thinking.
Problem-Solving Workshops:
• Hands-on workshops will enable students to apply concepts such as time value of money, risk analysis, and interest rate structures through practical exercises and problem sets.
Case Studies:
• Real-world case studies, including central bank policies, financial crises, and exchange rate systems, will help students connect theory to practical applications.
Group Projects:
• Students will collaborate on group projects to analyze central bank policies, financial market dynamics, or risk management strategies. Projects will culminate in group presentations to enhance teamwork, research, and communication skills.
Student Presentations:
• Group presentations will allow students to demonstrate their understanding of course material, practice analytical reasoning, and receive feedback from the instructor and peers.
Examinations:
• A midterm exam (Day 5) and a final exam (Day 10) will assess students' cumulative knowledge and ability to apply key concepts.

Required Course Materials

Primary Textbook:
• Cecchetti, S. G., & Schoenholtz, K. L. (2021). Money, Banking, and Financial Markets (6th Edition). McGraw-Hill Education.
o This textbook covers the foundational theories and applications of money, financial systems, interest rates, financial institutions, and monetary policy.
Supplementary Reading:
• Mishkin, F. S. (2016). The Economics of Money, Banking, and Financial Markets (11th Edition). Pearson Education.

o Provides additional insights into monetary theory, central banking
operations, and exchange rate policies.
Selected Articles and Reports:
• Central Banks Publications: Reports and case studies on monetary policy and exchange rate management.
• Research Articles: Instructor-selected academic articles and case studies on central banks, monetary policies, and financial risk management.
Software Tools:
• Microsoft Excel: Essential for conducting financial calculations, including time value of money, risk assessments, and interest rate analysis.
• Online Platforms:
o Financial news sources like Yahoo Finance, Investopedia, and The Economist for practical examples and real-world applications.
Additional Resources:
• Instructor-provided handouts, case studies, and notes tailored to topics such as financial crises, central bank operations, and policy evaluation.

Assessment

The assessment methods are tailored to provide continuous feedback and evaluate students' understanding:

Assessment Component	Weight	Purpose
Class Participation	10%	Active engagement in discussions and workshops.
Midterm Exam	25%	Assess foundational understanding of key topics.
Group Project (Report & Presentation)	25%	Analyze real-world monetary policy or financial systems.
Final Exam	40%	Evaluate cumulative knowledge and problem-solving skills.

 

Midterm Exam: Conducted on Day 5 (1.5 hours), covering Week 1 topics.
Group Project: Due on Day 9, with presentations conducted in class.
Final Exam: Conducted on Day 10 (1.5 hours), covering the entire course content.