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Management of Financial Institutions

<<< Previous RECAP:FINANCIAL INSTITUTIONS, CENTRAL BANK,
 
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Management of Financial Institutions - MGT 604
VU
LECTURE # 45
RECAP
1) FINANCIAL ENVIRONMENT & FINANCIAL INSTITUTIONS
·
ROLE OF FINANCIAL INSTITUTIONS
·
LONG RUN PERFORMANCE OF
·
FINANCIAL INSTITUTIONS FOR ECONOMIC GROWTH
·
CAPITAL MARKET
·
STOCK MARKETS
·
BOND MARKETS
·
COMMODITY MARKETS
·
MONEY MARKETS
·
DERIVATIVES MARKETS
·
FUTURES MARKETS
·
BORROWERS OF FINANCIAL MARKETS
·
LENDERS OF FINANCIAL MARKET
2) FINANCIAL INSTITUTIONS
·
TYPES OF FINANCIAL INSTITUTIONS
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CENTRAL BANK
·
COMMERCIAL BANKS
·
INVESTMENT BANK
·
SAVING BANK
·
MICRO FINANCE BANK
·
ISLAMIC BANK
·
AGRICULTURE BANK
·
SME BANKS
·
NON-BANKING FINANCIAL INSTITUTIONS
·
INVESTMENT COMPANIES
·
BROKERAGE HOUSES
·
LEASING COMPANIES
·
INSURANCE COMPANIES
·
MUTUAL FUND
·
FINANCIAL INSTITUTION & THEIR FUNCTIONS
3) CENTRAL BANK
·
Activities & Responsibilities
·
Monetary Policy
·
Central or National "Bankers Bank"
·
Interest Rate Intervention
·
Limits of Enforcement Power
4) Central Bank
·  Policy Instruments
·  Interest rate Intervention
·  Limits of Enforcement Power
·  Interest Rates
·  Open Market Operations
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Management of Financial Institutions - MGT 604
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Repo Market known as repurchase operations
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Direct Operations
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Buying or selling securities ("Direct Operations")
·
Foreign exchange operations such as forex swaps.
·
Capital Requirements
·
Reserve requirements
·
Exchange Requirements
5)
·
Balance of Trade
·
Balance of Payments
·
Factors that can affect BOT
1. Exchange rates
2. Trade agreements or barriers
3. Other tax, tariff and trade measures
4. Business cycle at home or abroad.
·
Current Account Surplus & Deficit
·
Capital or Financial Account Surplus & Deficit
·
Balance of Payments Equilibrium
·
Challenges of a Central Bank
1. Economic Growth
2. Poverty Reduction
3. Inflation
4. Stability in Forex Rate
·
Independence of Central Banks
6 to 11)
·  State Bank of Pakistan
·  History
·  Functions
·  Primary Function
·  Secondary Function
·  Non-Promotional Function
·  Regulation of Liquidity
·  Banking Assets & Liabilities
Various Departments of SBP
·  Agricultural Credit
·  Audit
·  Banking Inspection
·  Banking Policy
·  Banking Supervision
·  Corporate Services
·  Economic Policy
·  Exchange and Debt Management
·  Exchange Policy
·  Human Resource
·  Information System
·  Islamic Banking
·  Legal Services
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Management of Financial Institutions - MGT 604
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·
Payment System
·
Research
·
Statistics
·
Real Time Gross Settlement System (RTGS System)
·
Small and Medium Enterprises
11 & 12) Macro Economic Performance of a Country
·  National Income
·  Concepts of National Income
·  Difference b/w GDP & GNP
·  Regulating risk and the importance of risk management
·  Basel 2 Type Rules for Insurers
·  GLOBAL FINANCIAL SYSTEM
·  INTERNATIONAL FINANCIAL INSTITUTIONS
·  International Monetary Fund
·  The World Bank
·  World Trade Organization
·  Role of WTO in Pakistan Trade Environment
·  Asian Development Bank
·  ADB Projects in Pakistan
·  Paris Club
13) Pakistan Economic Aid & Debt
·  The major causes of poverty in Pakistan
·  Key challenges facing the Government of Pakistan
·  Future Prospects for Pakistan's Economy
·  Macroeconomic Stability
·  Strengthening Institutions
14) Increasing Foreign Direct Investment
·  Foreign Interest in Local Financial Markets
·  Enhancing and Sustaining a Growing GDP
·  How can Pakistan improve and sustain its growth rate?
1. Industrial Sector
2. Inter-provincial harmony in Pakistan
3. Achieving a Favorable Balance of Trade
4. Managing the Debt
5. Economic Resilience
15 to 19) Role of Commercial Banks
·
Purpose of a bank
·
Commercial Lending
·
Banking Services
·
A Bank's Profit
·
Services Typically Offered by Banks
·
Types of banks
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Management of Financial Institutions - MGT 604
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Banks in the Economy
·
Role in the money supply
·
Size of Global Banking Industry
·
Bank Crisis
·
Challenges within the Banking Industry
1. Economic Environment
2. Growth Strategies
3. The Management of the Banks
·  Public perceptions of banks
·  Profitability
·  SWIFT Society for Worldwide Interbank Financial Transactions
·  COMMERCIAL BANKING IN PAKISTAN
·  CAMEL
These are:
1) Capital Adequacy,
2) Asset Quality,
3) Management Soundness,
4) Earnings and Profitability,
5) Liquidity and Sensitivity to Market Risk.
·  Deposit Mobilization
·  Credit extension
·  Banking spreads
·  Asset composition
·  Problem bank management
BANKING SECTOR REFORMS in Pakistan
1. Privatization of Nationalized Commercial Banks
2. Corporate governance.
3. Capital Strengthening.
4. Improving Asset quality.
5. Liberalization of foreign exchange regime
6. Consumer Financing
7. Mortgage Financing
8. Legal Reforms
9. Prudential Regulations
10. Micro financing
11. SME Financing
12. Taxation
13. Agriculture Credit
14. E-Banking
15. Human Resources
16. Credit Rating
17. Supervision and Regulatory Capacity
18. Payment Systems
·  Commercial Banking in a Free Society
·  Private Deposit Insurance
20) Branch Banking in Pakistan
Remittances
Demand Draft
Telegraphic Transfer
Mail Transfer
Online Fund Transfer
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Types of Account
7. Individual
8. Joint Account
9. Sole Proprietorship
10. Club & Societies
11. Joint Stock Companies
12. Agents
Operations & Status of Accounts Nature of Accounts
7. Current Account
8. Profit & Loss Sharing
9. Current foreign currency
10. Saving Foreign Currency
11. Term Deposits
12. BBA "Basic Banking Account"
Commercial Banks Loan Facilities:
Types of Loan
Personal finance
Mortgage Finance
Business Finance
21) Role of Commercial Banks in Micro Finance Sector
22 to 26 ) Mutual Funds
History
Usage
Net asset value
Turnovers
Expenses and TER'S
1. Management Fees
2. Non-management Expenses
3. Service Fees
4. Fees and Expenses Borne by the Investor (not the Fund)
5. Brokerage Commissions
Types of mutual funds
Open-end fund
Exchange-traded funds
Equity funds
1. Capitalization
2. Growth vs. value
3. Index funds versus active management
Bond funds
Money market funds
Funds of funds
Hedge funds
Mutual funds vs. other investments
1. Share classes
2. Load and expenses
Criticism of managed mutual funds
28) Investment Banking
·  Organizational structure of an investment bank
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The main activities and units of Investment Banks
·
Size of industry
·
Recent evolution of the business
·
New products
·
Possible conflicts of interest
·
Types of Investment banks
29 & 30) Letter of Credit & International Trade
·  Terminology
·  How it works
·  Legal principles governing documentary credits
·  The price of LCs
·  Legal Basis for Letters of Credit
·  Risks in International Trade
31 & 32) Foreign Exchange & Role of Financial Institutions
Market size and liquidity
·
Market participants
·
o  Banks
o  Commercial companies
o  Central banks
o  Investment management firms
o  Hedge funds
o  Retail forex brokers
·  Trading characteristics
Factors affecting currency trading
·
o  Economic factors
o  Political conditions
o  Market psychology
·  Algorithmic trading in forex
·  Financial instruments
o  Spot
o  Forward
o  Future
o  Swap
o  Option
o  Exchange Traded Fund
·  Speculation
33 & 34) Leasing Companies
·  Conceptual background
o  Leasing of real property
o  Leasing of tangible personal property
·  Real leases
o  Private property rental
o  Commercial leasehold
Advantages of commercial leasing
Disadvantages of commercial leasing
·  The Leasing Sector in Pakistan and its Role in Capital Investment
35 & 36) Insurance Companies
·  Principles of insurance
Indemnification
·
·  When is a policy really insurance?
o  Does the contract contain adequate risk transfer?
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Management of Financial Institutions - MGT 604
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Is there a brightline test?
o
"Safe harbor" exemptions
o
Risk limiting features
o
Insurer's business model
·
·  Gambling analogy
·  History of insurance
·  Types of insurance
·  Types of insurance companies
·  Life insurance and saving
·  Size of global insurance industry
·  Financial viability of insurance companies
·  Controversies
o  Insurance insulates too much
o  Closed community self-insurance
o  Complexity of insurance policy contracts
o  Redlining
o  Health insurance
o  Dental insurance
o  Insurance patents
o  The insurance industry and rent seeking
o  Criticism of insurance companies
37) Role of Financial Institutions in Agriculture Sector
39) SME sector & Financial Institutions
·  SME Policy in Pakistan
·  Government of Pakistan & its Role
40) Financial Crimes
·  Money Laundering
·  Modern development
·  Process
·  Irregular funding
·  Captive business
·  Legal considerations
·  Fighting money laundering
·  Using information technology
·  September 11, 2001 and the international response to the underground economy
41) Financial Institutions & Risk Management
42) Banking Crimes
43) Collapse of Enron
44) Misleading in Baring Bank, Black Wednesday, Soloman Brothers and Treasury
Fraud.
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Table of Contents:
  1. Financial Environment & Role of Financial Institutions:FINANCIAL MARKETS &INSTITUTIONS
  2. FINANCIAL INSTITUTIONS:Non Banking Financial Companies
  3. CENTRAL BANK:Activities and responsibilities, Interest Rate Interventions
  4. POLICY INSTRUMENTS:Open Market Operations, Capital Requirements
  5. BALANCE OF TRADE:Balance of Payments Equilibrium, Public Policy and Financial Stability
  6. STATE BANK OF PAKISTAN:History, Regulation of Liquidity, Departments
  7. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS:Banking Inspection Department
  8. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Debt Management
  9. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Training Programs by SBP
  10. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Human Resources Department
  11. MAJOR DRIVERS OF FINANCIAL INDUSTRY:GLOBAL FINANCIAL SYSTEM, The World Bank
  12. INTERNATIONAL FINANCIAL INSTITUTIONS:ADB Projects in Pakistan, Paris Club
  13. PAKISTAN ECONOMIC AID & DEBT:Macroeconomic Stability, Strengthening Institutions
  14. INCREASING FOREIGN DIRECT INVESTMENT:Industrial Sector, Managing the Debt
  15. ROLE OF COMMERCIAL BANKS:Services Typically Offered by Banks, Types of banks
  16. ROLE OF COMMERCIAL BANKS:Types of investment banks, The Management of the Banks
  17. ROLE OF COMMERCIAL BANKS:Public perceptions of banks, Capital adequacy, Liquidity
  18. ROLE OF COMMERCIAL BANKS:Problem bank management, BANKING SECTOR REFORMS
  19. ROLE OF COMMERCIAL BANKING:Private Deposit Insurance,
  20. BRANCH BANKING IN PAKISTAN:Remittances, Online Fund Transfer
  21. ROLE OF COMMERCIAL BANKS IN MICRO FINANCE SECTOR
  22. Mutual funds:Types of international mutual funds, Mutual funds vs. other investments
  23. Mutual Funds:Criticism of managed mutual funds, Money Market Fund
  24. Mutual Funds:Balanced Funds, Growth Funds, Specialized Funds, Measuring Risks
  25. Mutual Funds:Cost of Ownership, Redemption Fee, Reports to Shareholders
  26. Mutual Funds:Internet Fraud, The Pyramid Scheme, How to Avoid Investment Fraud
  27. Mutual Funds:Investing In International Mutual Funds, How to Pre-Select a Mutual Fund
  28. Role of Investment Banks:Recent evolution of the business, Possible conflicts of interest
  29. Letter of Credit:Elements of a Letter of Credit, Commercial Invoice, Tips for Exporters
  30. Letter of Credit and International Trade:Terminology, Risks in International Trade
  31. Foreign Exchange & Financial Institutions:Investment management firms, Exchange Traded Fund
  32. Foreign Exchange:Factors affecting currency trading, Economic conditions include
  33. Leasing Companies:Basic Purpose of Leasing, Technological Benefits
  34. The Leasing Sector in Pakistan and its Role in Capital Investment
  35. Role of Insurance Companies:Indemnification, Insurer’s business model
  36. Role of Insurance Companies:Life insurance and saving
  37. Role of financial Institutions in Agriculture Sector:What is “Revolving Credit Scheme”?
  38. Agriculture Sector and Financial Institutions of Pakistan:What is SMEs
  39. Can Government of Pakistan Lay a Pivotal Role in this Sector?:Business Environment
  40. Financial Crimes:Process of Money Laundering, Terrorist Financing
  41. DFIs & Risk Management:Managing Credit Risk, Managing Operational Risk
  42. Banking Fraud & Misleading Activities:Rogue Traders, Uninsured Deposits
  43. The Collapse of ENRON:Auditing Issues, Corporate Governance Issues, Corrective Actions
  44. Classic Financial Scandals:Corruption, Discovery, Black Wednesday
  45. RECAP:FINANCIAL INSTITUTIONS, CENTRAL BANK,