London School of Economics and Political
Science (LSE)
Modules
94
Principles of banking
This subject serves as an introduction
to the principles and process of financial intermediation with particular
reference to the operations of the UK banking system. Banking operations
are examined as portfolio allocation preferences, with emphasis placed
on the role played by innovation and deregulation in the development
of bank products and services. For this purpose, the UK banking system
is taken as an exemplar of many of the trends that are reshaping financial
services around the world.
Introduction to the financial system:
the role of the finance intermediation:the process and implications of
financial intermediation; rationale for the existence of financial
intermediaries; evolution of financial systems; recent developments
in the UL financial system; market structure and financial innovation.
Retail banking: the nature of
retail banking in the UK; payment services; risks in retail banking;
the role of the central bank in retail banking.
Wholesale and international banking:
the nature of wholesale banking; off-balance sheet business; international
banking; sovereign lending risk.
Financial markets: the nature
of financial markets; the principles of hedging; speculation and arbitrage;
the efficient markets hypothesis; international financial centres.
The foreign exchange market: introduction
to the Forex markets; nature of the Forex; types of business; the
efficiency of the Forex markets.
Euro-securities markets: outline
of the functions of the markets; Eurodollar; credit creation; Eurobonds;
Euronotes; Euro-equities; securitisation.
Risk management: the nature of
risk; financial futures; options and swaps; forward rate agreements;
managing exchange rate risk and interest rate risk.
Regulation of the financial system:
history of bank failures; the prudential control of banks; depositor
protection; prudential regulation in the UK; prudential regulation
in the US; international co-ordination industrialised countries; the
US banking system; the banking structure in Japan; the single European
market in financial services; banking structures in developing countries:
Islamic banking; banking structures in Eastern Europe.
|
