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Unit information: Bank Management and Risk Management in 2018/19

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Unit name Bank Management and Risk Management
Unit code EFIMM0052
Credit points 15
Level of study M/7
Teaching block(s) Teaching Block 2 (weeks 13 - 24)
Unit director Dr. Balint Horvath
Open unit status Not open
Pre-requisites

None

Co-requisites

Specifically for students studying on the MSc in Economics and Finance - if taking this unit, you can not take:

EFIMM0006 - Banking OR

EFIMM0054 - Principles of Financial Intermediation OR

EFIMM0053 - Banking Regulation and Financial Stability

School/department School of Accounting and Finance
Faculty Faculty of Social Sciences and Law

Description

This unit introduces students to the management decisions banks make. The unit will focus primarily on assessing and managing bank risks (e.g. credit risk, market risk, etc.), however, other business decisions, such as the type of lending a bank engages in, or its geographic and organizational structure, will also be addressed. The unit covers

  • Asset-liability management (including liquidity and interest rate risk management)
  • Evaluating bank performance (e.g. balance sheet ratios)
  • Capital allocation
  • Securitization
  • The organizational structure of a bank
  • Product diversification and geographic expansion
  • Measuring risk (measuring probability of default, loss given default, dependencies, market risk)
  • Risk management tools (e.g. use of derivatives, risk limits)

Intended learning outcomes

On completion of this unit students will be able to:

  1. Demonstrate understanding of the trade-offs banks face when making management decisions;
  2. Demonstrate understanding of and critically evaluate the main concepts used to evaluate a bank’s performance;
  3. Assess the risks banks typically face;
  4. Demonstrate understanding of and use credit, market and operational risk models;
  5. Apply various risk management tools.

Teaching details

15 hours of lectures; 5 x 1 hours of small group workshops

Lectures will take place in a traditional lecture setting, all efforts will be made to ensure lectures are as engaging and interactive as possible with the active use of student questioning and student participation in exercises. During the workshops students will discuss scientific papers related to the lectures; learn to use computer software to implement risk models and solve numerical exercises to deepen their understanding of quantitative risk models.

Assessment Details

The unit is assessed via a two-hour examination (70% of the final mark) and coursework (30% of the final mark). The exam will require students to demonstrate their knowledge and understanding of basic bank and bank risk management issues. The test will be composed of a combination of qualitative and quantitative questions, which will require students to demonstrate that they understand the various types of risks banks face and the models that are used to quantify these risks, and that they can apply these models (ILO1 to ILO5). In addition, the exam will test the students’ ability to think critically and communicate effectively in writing under exam conditions. The coursework will be an empirical project, which will ask students to implement and analyse the results of one of the risk models covered during lectures (ILO4 and ILO5).

Formative assessment will be undertaken through small group workshops, where students will receive verbal and, occasionally, written feedback on their work. In addition to comments on their individual work, a 'model answer' will also be provided in order to inform students of what will be expected of them in the examination.

Reading and References

The textbooks for this unit are:

  • Bessis, J. (2015). Risk Management in Banking, Wiley (4th edition)
  • Saunders, A.; Cornett, M. (2013). A Risk Management Approach, McGraw-Hill (8th edition)
  • Rose, P.S. and Hudgins, S.C. (2010). Bank Management and Financial Services. 8th edition, McGraw-Hill (International edition)
  • Hull, J. (2015). Risk Management and Financial Institutions, Wiley (4th Edition)

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