Eastern University

Syllabus
Course Code: FIN 320 Name of the Course: Money and Banking Program: BBA (Bachelor of Business Administration) Semester: Summer 12 Instructor Muhammad Zahedur Rahman, Assistant Professor PgDMC [IMCB], MBA (Major in Finance) [DU], BBA [DU] Course Objectives This course addresses classical and contemporary issues in the theory of money, banking, and financial institutions. Topics covered include: the structure of central banks, theories of money demand and money supply, the relationship between money supply and overall economic activity, the theoretical and practical aspects of monetary policies and money creation, the efficacy of fiscal policies versus monetary policies, and the role the Bangladesh Bank plays in economic stabilization. We shall pay particular attention to the money creation process, to endogenous money versus exogenous money, and to the ability of the Bangladesh Bank to stabilize the economy. Expected Outcomes At the end of the course, the students will be able to: Describe the role of money and financial markets, institutions, and instruments in a market economy. Explain the interrelationships between money, inflation, and interest rates. Demonstrate how supply and demand analysis in graphical form can be applied to loanable funds markets. Explain the time value of money and demonstrate an ability to calculate the values of various financial assets. Explain and evaluate the competing theories underlying the term structure of interest rates. Describe the function of foreign exchange markets and explain their operation using supply and demand analysis. Describe the history, modern structure, and policy tools of the Bangladesh Bank. Explain the classical, Keynesian, and monetarist macroeconomic monetary theories. Text Frederic S. Mishkin's The Economics of Money, Banking, and Financial Markets (7th Edition) Reference Books Peter Roses Money and Capital Markets (8th Edition) Peter Howells & Keith Bains The Economics of Money, Banking and Finance (4th Edition) Robert Wright & Vincenzo Quadrinis Money and Banking (1st Edition) Teaching Methodology Primary teaching methods for this course include class lecture, class discussion and assignments. Also, the use of current technologies will be expected of students. Course Requirements The evaluation of the performance of the students in the course will be made according to the letter grade as indicated below. The grade will be based on class attendance, participation and presentation, tests, assignments and mid-term and final examinations as specified below. Students are required to actively participate in the class discussion. The cases to be discussed in a class are indicated in the program. The topics to be covered in a test will be determined in the prior class session. The assignments and writing the project will be announced after discussion in the class. Any change in the Program will be
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Instructor: Muhammad Zahedur Rahman Office Hour: Saturday (2 pm 3 pm) E-mail: m_zahedur@easternuni.edu.bd

announced in the class. So, any one missing a class should be aware of any announcement made in that class from the fellow mates or the Instructor to make preparation for the following/subsequent class session(s). Grading System Marks obtained (Out of 100) 80 & above 75 79 70 74 65 69 60 64 55 59 50 54 45 49 40 44 00 39 Grade A+ A A B+ B B C+ C D F I W R Grade Points 4.00 3.75 3.50 3.25 3.00 2.75 2.50 2.25 2.00 0.00 Meaning Outstanding Excellent Very Good Good Satisfactory Above Average Average Below Average Pass Fail Incomplete Withdrawn Retaken 05% 05% 10% 10% 30% 40% 100%

Evaluation System Class Attendance Class Participation Class Tests/Quiz Assignments/Term paper/Presentation Mid-term Final l Total

No Make-Up Policy There will be NO make-up midterms and NO make-up quizzes given!!! You need to plan to be present for all tests. Missed tests will only be excused if you speak with me before the test date or within one week of the missed test. If I am not informed of the reason you missed a test within one week of the test, a grade of zero will be given for the missed test. If you miss a quiz, regardless of the reason, it will be considered your lowest quiz grade. If you miss more than one quiz, regardless of the reason, those quizzes will be recorded as zeroes. If you miss the mid-term & final exam and I determine that it is an extreme circumstance, I will arrange for you to take a make-up mid-term & final exam at my convenience, not yours, provided that you have completed all the formalities before the make-up exam (e.g., taking permission from the Dean, and paying the Fee). If I do not determine it to be an extreme circumstance, a grade of zero will be recorded for your final exam. Attendance You are required and expected to attend all scheduled class meetings. As an adult, I am sure you understand the consequences of missing a class. Since a lot of material will be presented in each lecture, your course grade will presumably be negatively correlated with any absences you have. If you do miss a class for any reason, it is your responsibility to get the lecture notes from your classmates. I will answer specific questions regarding the material, but I will not re-teach any lecture. In addition, any quizzes missed due to an absence will not be made up. Class Conduct It is my personal belief that interactive learning is a key component to understanding material, so you will be expected to participate in class. One of the reasons for coming to class is to learn how to communicate well with others, so there is no better time than now to start alleviating the anxiety associated with speaking in front of others. However all communication in the classroom should be related to the course material or the class discussion. I expect all of us to give each other the courtesy and respect we deserve, so if any of your behaviors become a distraction to the other students or myself, you will be instructed to leave the classroom.

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Student Responsibilities You are responsible for learning and understanding all of the material covered in class and any material assigned outside of the classroom. I expect you to attend all class meetings, pay attention, take good notes, and ask and answer questions related to the topics covered. With regard to material outside of the classroom, you are instructed to read the relevant chapters in your textbook. The textbook provides beneficial summaries, and review and analytical questions at the end of every chapter, which you should answer in your studies. During the semester, you also need to pay particular attention to current events related to money and banking issues. As upper level students, it is time to apply what you learn in class to better understand the world around you. This information can be acquired from a variety of sources including television (NTV, Channel i, ATN, etc.), newspapers (The Daily Star, Financial Express, and The Independent, etc.), and the Internet as well. E-mail me If you have questions/problems you want to ask about, you may see me during my office hours, or e-mail me. If you do the latter, please fill in the subject category as follows: mail-FIN320-last name. This will help me to respond in a timely fashion. Academic Dishonesty Cheating will NOT be tolerated!!! As a student of Eastern University, it is your responsibility to act with academic integrity. Cheating includes, but is not limited to, looking at others work, allowing others to look at your work, talking during a test, using non-allowed material during a test, leaving the classroom for assistance during a test, etc. In the event of cheating taking place, a grade of zero will be given to ALL parties involved for that test. This includes not only those actively involved in cheating, but also those who allow cheating to take place. I also reserve the right to move any student during a test in order to dissuade cheating from taking place. Program Week
Day, Date (Two days /week)

Topics
Why Study Money, Banking, and Financial Markets? Why Study Financial Markets? Why Study Banking, and Financial Institutions? Why Study Money & Monetary Policy? An Overview of the Financial System Functions of Financial Markets Aggregate Demand and Supply Analysis Aggregate Demand Aggregate Supply Equilibrium in Aggregate Supply and Demand Analysis What Is Money? Meaning of Money Functions of Money Evaluation of the Payments System Measuring Money Multiple Deposit Creation and the Money Supply Process Four Players in Money Supply Process The BBs Balance Sheet Control of the monetary Base Multiple Deposit Creation: A Simple Model Determinants of the Money Supply The Money Supply Model and the Money Multiplier Factors that Determine the Money Multiplier Additional Factors that Determine the Money Multiplier Overview of the Money Supply Process

Chapters
The Economics of Money, Banking, and Financial Markets, Mishkin_7th Ed. Chapter-1 & Chapter-2 The Economics of Money, Banking, and Financial Markets, Mishkin_7th Ed. Chapter-25

Monday & Wednesday 28th May & 30 May

Monday & Wednesday 4th Jun & 6th Jun

Monday & Wednesday 11th Jun & 13th Jun

The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-3 & Chapter-15

Monday & Wednesday 18th Jun & 20th Jun

The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-16

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Monday & Wednesday 25th Jun & 27th Jun

How Does the Central Bank Operate? Bangladesh Bank in Brief Financial System Monetary Policy Tools of Monetary Policy The Market for Reserves and the Call Money Rate Open Market Operations Discount Policy Reserve Requirements Conduct of Monetary Policy: Goals & Targets Goals of Monetary Policy Central Bank Strategy: Use of Targets Choosing the Targets Mid-Term Exam Money and Inflation Money and Inflation : Evidence Meaning of Inflation Views of Inflation International Financial System Intervention in the Foreign Exchange Market Balance of Payments Evolution of the International Financial System Understanding Interest Rates Measuring Interest Rates Other Measures of Interest Rates The Distinction Between Interest Rates and Returns The Distinction Between Real and Nominal Interest Rates The Behavior of Interest Rates Determinants of Asset Demand Supply and Demand in the Bond Market Changes in Equilibrium Interest Rates Supply and Demand in the Market for Money: The liquidity Preference Framework The Risk and Term Structure of Interest Rates Risk Structure of Interest Rates Term Structure of Interest Rates Final Exam

bangladesh-bank.org The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-17 Money and Capital Markets, Peter Rose_8th Ed. Chapter-14 The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-18

Monday & Wednesday 2nd Jul & 4th Jul

Monday & Wednesday 16th Jul & 18th Jul

9th July 15th July

Monday & Wednesday 23rd Jul & 25th Jul Monday & Wednesday 30th Jul & 1st Aug

The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-27 The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-20 The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-4

11

12

Monday & Wednesday 6th Aug & 8th Aug

13

Monday & Monday 13th Aug & 27th Aug

The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-5 The Economics of Money, Banking, and Financial Markets, Mishkin_ 7th Ed. Chapter-6

14

Wednesday & Monday 29th Aug & 3rd Sep 7th Sep 14th Sep

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