MBA Program
Managing Financial Services Organizations
Fin 748
Fall, 2002
Dr. K. Rhoda
CH 415C
Phone: (215)
951-1033
E-Mail: rhoda@lasalle.edu
Return to Fin 748
Course Overview and Objectives
Financial institutions (e.g., banks, thrifts, investment companies,
insurance companies, pension funds) form the backbone of the financial
system. These institutions intermediate
between lenders and borrowers and facilitate the exchange of money and
financial instruments. Understandably, financial institutions have a great deal
to do with the flow of funds and the determination of interest rates, exchange
rates and the overall level of economic activity. As a result, they have a substantial impact on the financial
decision-making process of individuals and firms.
This course is a study of the financial system and of the financial
institutions that participate in it. In
order to fully understand the role of financial institutions in the financial
system we must first examine the general environment, both domestic and
international, within which they operate and then study the nature and function
of each separate institution. The
overall goal is to give you a broad perspective as to the nature of the
financial system and how financial institutions operate within it.
Over the past several years, however, we have seen many cases of
financial institution mismanagement.
The problems in the Banking, Thrift, Insurance and Securities industries
have raised questions as to the health and safety of the entire financial
system as well as the ethics of the involved managers. A thorough study of financial institutions
must therefore include an examination of how and why they (and their managers)
fail and the consequences of these failures for all concerned.
Specifically, the goals of the course are:
1. To expand
upon your knowledge of the general nature of the financial system and the role
that financial institutions play in it.
2. To examine
how financial institutions affect and are affected by changes in financial
market conditions.
3. To examine
the structure, operation and management problems associated with the major classes
of financial institutions and to give you practice in addressing these problems
as managers through the use of case studies.
4. To explore
the consequences of specific cases of financial institution mismanagement for
owners, customers, employees, managers and society.
Prerequisite:
MBA 692
Text:
Gardner, M., Mills, D. and Cooperman, E. Managing Financial
Institutions: An Asset/Liability
Approach, The Dryden Press, 4th
Edition (2000).
Course Procedures
In order to meet the goals of the course, we will have a mixed-bag of
assigned readings, lectures and class discussions, problems and case
studies. These are organized in two
Sections with the reading assignments listed on the last two pages of the
syllabus.
During the first half of the course we will talk about the general
nature of the financial system and the impact that it has on financial
institution management. Class time will
be devoted mainly to lectures and discussions of selected questions/problems
related to the reading material.
During the second half, we will study specific financial
institutions. This will involve
discussing the reading material and examining case studies in financial
institution management. As a way of discussing
these cases, you will be asked at the beginning of the semester to organize
into groups or teams. Each will have
two tasks. First, each team will be
assigned a case study to analyze and to present to the class. After each case is presented, the other
teams will be expected to participate in the discussion and either support or
refute the lead-group's analysis with one of their own. In addition, each group will submit a
written version of its analysis by the end of the semester. The presenting group will be graded on its
presentation and write-up with input from all members of the group on each
member’s contribution.
The second task of each team is to analyze an instance of financial
institution mismanagement. Each team
will be assigned a name of a financial firm that has recently either failed or
has experienced severe difficulty. Near
or at the end of the semester the teams will present their analyses of the
firms to the class in a seminar setting. A detailed description of both aspects
of the team assignment will be distributed once the groups are formed (in 2-3
weeks).
In addition to your work with your
base groups, you will be asked to team up with other class members for the
purpose of discussing questions during class time. These questions will be drawn from the text and also from ongoing
events reported in the financial press (see next paragraph).
Finally, it should be assumed that you are keeping up-to-date on
business and financial developments by regularly reading the Wall Street Journal and/or other
business periodicals. This is
particularly important to do in this area of finance since things are changing
so rapidly. So that we can inform each
other of the ongoing events in the financial system, some class time will be
devoted each week to discussions of what has been happening in the past
week. These discussions will form the
basis for linking the course material to the actual operation of the financial
system. Participating in these
discussions is important for this reason and also because some exam questions
will draw from them.
Exams will include a mid-term covering Section I and a final covering
Section II.
Your course grade will be determined as follows:
Midterm Exam 40%
Final Exam
40%
Team Assignments
and Class Discussions 20%
COURSE
OUTLINE
Section I:
The
Financial Environment for Financial Institution Management (8 weeks)
1. Introduction to Financial Institution Management
Chapters 1 - 4
2. Interest Rates, Exchange Rates and Firm Value
Chapter 14
3. The Term
Structure of Interest Rates
Chapter 15
5. Interest Rate Risk and Immunization
Chapter 16
6. Risk Management: Futures,
Options and Swaps
Chapters 17, 18
Midterm
Exam (Approx. October 15th )
Section II:
Management
Problems and Practices for Financial Institutions (7 weeks)
1. Depository Institutions
Performance, Profits and Risk
Chapters 5, 6
Fee and Off-Balance Sheet Income
Management
Chapter
9
Domestic and International Lending
Chapter 21
2. Non-Depository Institutions
Insurance Companies
Chapter 10
Pension Funds and
Investment Companies
Chapter 12
Written
Analyses Due (Last class night)
Final
Exam