A well-functioning financial system is fundamental to a modern economy, and banks provide unique and vital functions in society.

• Why do we have to have banks in this world?

• Is the mobile payment system a threat to commercial banks?

• What is the difference between bitcoin and Central Bank Digital Currency?

• How to prevent banks from being “too big to fail”?

    From the world's first intuition that provides credit services to the Imperial Bank of China, the first modern bank in China established by Mr. Sheng Xuan Huai, the founder of Shanghai Jiao Tong University, then to the top five largest banks in the world after years of reform; from the first bank draft to Mobile Payment, the Chinese wisdom helped the banking industry go through many ups and downs.

    On the other side of the Pacific Ocean, the banking industry in the U.S. has also been through many ups and downs, from the Bank Run in the 1930s to the Savings and Loans Debacle in the late 1980s, then to the Subprime Loan Crisis in 2008.

Through case studies, building on basics in finance and principles in economics, I will analyze the specialness of the financial intermediaries, and risks faced by banks, as well as the game played between the regulators and bank managers.

    This is an all-in-English course. I will introduce the history and reform in the banking industry in China to the world, and build a bridge between the West and the East; I will introduce analytical tools and techniques to deal with risks faced by banks in the changing global economy and build a bridge between the theory and practice.

This course builds on basic financial theory and the principles courses in economics. It addresses topics that are important for managing financial institutions in a rapidly changing international environment. Upon successful completion of the course, students should be able to understand the role of financial institutions in the economy; explain why banks are unique, and therefore merit special attention; to understand the analytical foundation underlying financial institutions management, and be able to use them to analyze important financial issues, including financial crisis; be familiar with risk management techniques to deal with the various risks banks and other financial institutions face.

Prerequisites:

• Introduction to Finance

• Money and Banking

• Students are expected to have some background in basic economic theory (macroeconomics and microeconomics), algebra, differential calculus, statistics, and a disposition to keep themselves informed of current developments in the area of banking and finance.

Textbooks and References:

Textbook:

• Saunders and Cornett, Financial Institutions Management: A Risk Management Approach, 8th edition/International Edition, McGraw Hill, 2014 (FIM)

Reference book：

• John C. Hull, Risk Management and Financial Institutions, Second Edition, Pearson, 2010

• Peter S. Rose and Sylvia C. Hudgins, Bank Management and Financial Services, 9th Edition, International Edition, McGraw-Hill, 2013 (BMFS)

• Other journal articles and news articles (see the discussion board)

Q :  What are the textbooks and references for this course?

A :   The  information in the lecture notes comes from the following sources: 

1. Textbook: Saunders and Cornett, Financial Institutions Management: A Risk Management Approach, 8th edition/International Edition, McGraw Hill, 2014 (FIM)

2. Website of Federal Reserve and People's Bank of China, and other central banks

3. Journal articles in the references for each topic

4. News articles and other documents/videos from the internet (open-source)

Q :  What are the differences between the Lecture Videos and zoom-live class video

A :  Lecture videos are short and concise (10 hours in total), contains the discussion about the core concepts and methods in this course. The zoom-live class videos contain much richer content, including discussion of the latest news and development in the banking industry and related questions, such as "mask run" vs "bank run", the monetary policy during Covid-19 pandemic and etc.