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MBFM_Handout

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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani

Pilani Campus
AUGS/ AGSR Division

FIRST SEMESTER 2023-24


COURSE HANDOUT
Date: 09.08.2023

In addition to part I (General Handout for all courses appended to the Time table) this portion gives further specific
details regarding the course.
Course No. : ECON F312
Course Title : Money, Banking and Financial Markets
Instructor-in-charge : ARUN KUMAR GIRI
Tutorial Instructor : Karambir Singh Dhayal

1. Course Description:
Money and its functions; money market; foreign exchange market; financial market; financial derivatives; the
banking firm; non-banking financial institutions; Indian banking; monetary transmission mechanisms; money
and inflation; central banking; determinants of money supply; tools, goals and targets of monetary policy;
international monetary and financial system.
2. Scope & Objective of the Course:
 To study the mechanisms of debt market and role played by interest rate
 To study the dynamics and money market and stock market
 To explore the structure of financial system and understand the reasons financial crisis
 To understand the role of central banks and commercial banks in regulation money supply in the economy.
 To discuss the role of central banks in the conduct of monetary policy
 To study the foreign exchange rate dynamics and foreign exchange risk
 To discuss the risk management techniques for financial institutions.

3. Text Book:
Mishkin, Frederic S, Stanley G Eakins, T Jayakumar and R.K. Pattnaik, “Financial Markets and Institutions, Pearson
Education, Eighth Edition, 2017.

4. Reference Books:
R1. Paul Jastin and Padmalatha Suresh, “Management of Banking and Financial Services”, Pearson Education, Third
Edition, 2014.
R2. Mishkin Frederic S, “The Economics of Money, Banking and Financial Markets”, Pearson Education (AW),
Seventh Edition, 2004.
R3. H.J. Johnson, Financial Institutions & Markets: A Global Perspective; McGraw Hill, 1993 (Int. edition.)
5. Learning Outcomes:
 Identify the implications, risks, and opportunities of global markets.
 Acquire and demonstrate analytical and problem solving skills within money, banking, and financial market.
 Assess how monetary activities affect an economy.
 Describe the structure of financial markets, the factors that shape them, and how they are regulated.
 Explain the role of financial markets in the economy.
 Explain the basic purposes of the monetary and financial systems.
 Identify the markets for stocks, bonds, derivatives, and currencies.
 Explain the roles of banks and other financial intermediaries.
 Analyze how the central bank affects the economy.
 Assess how a financial crisis happens and how policymakers should respond

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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division

6. Course Plan:

No. of Learning Objective Topic to be Covered Reference (TB) Learning Outcome


Lectures
2 Overview, Why Study Financial Chapter 1 Knowledge regarding
Composition and Markets and Institutions? fundamentals of Financial
economic significance markets and institutions
2 Money & Capital Overview of the Financial Chapter 2 Understanding fundamentals of
Interface System, Financial system.
3 Understanding Why Do interest Rates Chapter 3 Fundamentals of interest rate
Financial Markets Mean and What is Their and their role in valuation
Role in Valuation
3 Understanding Why do Interest Rate Chapter 4 Understanding of volatility of
Financial Markets Change? interest rate and its implications
4 Factors Affecting How do Risk and Term Chapter 5 Analytics behind the risk and
interest Rates Structures affect interest term structures of interest rates
Rates?
2 To Study the Are Financial Markets Chapter 6 Understanding the market
Efficiency of Financial Efficient? efficiency and rational
Markets expectations
2 Structure of Financial Why do Financial Chapter 7 Analyzing the role of financial
Institution Institutions Exist institutions
2 Causes of financial Why Do Financial Crisis Chapter 8 Understand the causes and
crisis Occur and why are they so consequences of financial crisis.
damaging to the Economy?
2 Functions of Central Central Bank and Reserve Chapter 9 Role of Central Banks in
Bank Bank of India controlling the money supply
2 Conduct of Monetary Conduct of Monetary Chapter 10 Understand the Monetary policy
Policy Policy: Tools, Goals and and strategy in conduct of
Strategy and tactics monetary policy
2 Transmission Transmission Mechanisms Chapter 26 (R 2) Operations of monetary policy
Mechanism of Monetary Policy
2 Why we need money The Money and Bond Chapter 11 &12 Functions of Money and Bond
and bond markets market markets
3 International Interface Foreign Exchange Market Chapter14 Working of foreign exchange
markets
3 International Risk International Financial Chapter 15 Understand the role of
Management. System International financial
derivatives
2 Banking business Banking and Management Chapter 16 Analytics behind the bank
operations of Financial Institutions management
2 Risk Management Risk Management in Chapter 19 Risk Management of Banks and
Financial Institutions Financial institutions
3 Types, designs and Hedging With Financial Chapter 20 Understand the concept of
basis of financial Derivatives hedging with financial
derivatives derivatives.

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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division

7. Evaluation Scheme:
Component Duration Weightage (%) Date Nature of component
(Mins) (Close Book/ Open Book)
Mid Semester Test 90 30 11/10 (FN1) Closed Book
Continuous Evaluation -- 25 Continuous Closed Book
Comprehensive Exam 120 45 11/12 (FN) Partly OB

8. Chamber Consultation Hours: Tuesday 4 PM to 5 PM

9. Notices
For course-related announcements, please check your email regularly. All the information will also be
communicated during the class.

10. Make-up Policy


Make-up for the Mid-Sem and Comprehensive examinations shall be granted only in genuine cases (such as
hospitalization) after a thorough examination of the application. The conduct of make-up is to be decided by
the instructor-In-Charge/instructors only.

11. Note
Evaluative components will be conducted during scheduled hours as specified. Changes, if any, will be
communicated well in advance. Please quote your ID number and name before requesting anything related to
the course. Students must write correct ID numbers, in all the evaluative components, failing which their
answer sheets will not be evaluated.

Instructor-in-charge
ECON F312

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