Postgraduate Certificate in Banking (Distance Learning)

Welcome to this module on Bank Financial Management. At the outset, it is worth noting that this module has a somewhat more applied feel to it than many other modules in the Master’s and Postgraduate Diploma programme, focusing as it does on the microeconomic problems of financial management of banking firms. This does not mean, however, that the module is devoid of theoretical interest.

Learning outcomes

This module examines the role and importance of bank financial management to the modern bank. It teaches the basic models of financial management taught by University Economics Departments and Business Schools, which were constructed from the experience of mature capitalist economies. The module discusses the various trends shaping banking markets, such as institutionalisation, securitisation, globalisation and concentration.

When you have completed this module, you will be able to:

• discuss trends affecting the whole financial services industry
• assess the implications of change for bank risk management
• outline how the behaviour of banks has been modelled
• identify the risks facing bank financial managers
• explain the need to adapt risk management procedures to an increasingly international financial system
• discuss how interest-rate risk can be managed using hedging activities through the use of financial derivatives and securitization
• explain why funding mix and costs are important to bank management when making loan and investment decisions
• discuss how credit risk and default premiums are assessed and monitored
• analyse the relationship between bank performance and capital adequacy

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Koch TW & SS MacDonald (2015) Bank Management, 8^th Edition, Cengage Learning.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, which is a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Banking Innovations and Risk

• 1.1 Introduction
• 1.2 Bank Management and Bank Financial Management
• 1.3' The good old days': A Simple Balance Sheet View of Banking
• 1.4 The Transformation of Banking – 1970 to 2007
• 1.5 Financial Innovation
• 1.6 Implications of Banking Innovations for Bank Financial Management
• 1.7 An Assessment of Credit Risk Transfer
• 1.8 Conclusion

Unit 2 Bank Accounts: A Useful Tool if Handled with Care

• 2.1 Introduction
• 2.2 The Bank's Balance Sheet: An Introduction
• 2.3 The Bank's Income Statement
• 2.4 Fair Value and Mark-to-Market Accounting: A Hot Topic with Real Potential Effects
• 2.5 Conclusion

Unit 3 Bank Valuation

• 3.1 Introduction
• 3.2 The Functions of Bank Financial Managers
• 3.3 The Risks Facing Bank Financial Managers
• 3.4 The Value of the Banking Firm
• 3.5 The Difference Between Market and Book Value
• 3.6 Performance Analysis Using Financial Ratios
• 3.7 Conclusion

Unit 4 Bank Risk Management – Liquidity Management

• 4.1 Introduction
• 4.2 Bank Risk Management
• 4.3 Concepts of Liquidity and Solvency
• 4.4 Sources of Liquidity
• 4.5 Measuring Banks' Liquidity
• 4.6 Practical Liquidity Management
• 4.7 Payments System Risk and its Potential Impact on Bank Liquidity
• 4.8 Conclusion

Unit 5 Bank Risk Management – Interest Rate Risk Management

• 5.1 Introduction
• 5.2 Interest-Rate Risk Management
• 5.3 GAP Analysis
• 5.4 Duration Analysis
• 5.5 Hedging Interest Rate Risk Off Balance Sheet
• 5.6 Conclusion

Unit 6 Cost of Funds and the Funding of Operations

• 6.1 Introduction
• 6.2 Measuring the Cost of Funds
• 6.3 A Note on the Cost of Capital
• 6.4 Using Cost of Funds Measures
• 6.5 Risks Associated with Raising Funds
• 6.6 Conclusion

Unit 7 Bank Risk Management – Credit Risk

• 7.1 Introduction
• 7.2 Credit Risk
• 7.3 Credit Risk and Default Premiums
• 7.4 Loan Administration: General Procedure
• 7.5 Credit Assessment
• 7.6 Loan Pricing
• 7.7 Problem Loans
• 7.8 Conclusion

Unit 8 Capital Management

• 8.1 Introduction
• 8.2 Basel Accords' Rules and Categories of Bank Capital
• 8.3 Conclusion
• Appendix 8.1 ‘Report for G7 Summit’

Module samples

• M422 Module Introduction (PDF)
• M422 Specimen Examination (PDF)
• M422 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

Welcome to the Banking Strategy module. The world of banking has changed considerably in recent years, particularly since the crisis of 2007–09. This module aims to give you a good understanding of the characteristics of the financial system and the role of intermediation, as well as the implications of recent structural changes for bank management and external corporate control. You will learn about banks’ sources of funding and how the environment after the 2007–09 crisis transformed their funding choices.

The module also aims to provide an analysis of the factors that can contribute to success or failure in the execution of banks’ mergers and acquisitions (M&A) transactions, and the cultural challenges that may be crucial to the success of an M&A deal involving banks. We hope that your study of the module will enable you to evaluate the business strategy and implementation failings that have given rise to bank failure and to assess the benefits and costs from regulation of the financial services industry, and the net regulatory burden faced by the banking industry.

Learning outcomes

When you have completed your study of this course, you will be able to:

• analyse the particular risks banks are exposed to as a direct result of the intermediation process
• assess the degree to which a bank's strategy may lead to an optimal level of risk, for the bank and for the financial system as a whole
• describe the financial intermediation linkages in a financial system
• analyse patterns of structural change and strategic positioning over cycles of globalisation, deregulation and consolidation
• describe the sources of funding for banks and discuss how they affect banks' profitability and risk
• explain the sources of risk facing banks
• discuss the changing nature of risks facing banks in emerging economies
• explain the causes of the global financial crisis of 2007–09, identifying the features that were unique to this crisis, and those that are common to other crises
• analyse the business models which made some banks especially vulnerable in that crisis
• consider the strategic implications for banks of the regulatory environment.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Smith RC, I Walter & G DeLong (2012) Global Banking. 3rd Edition. Oxford University Press.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Financial Intermediation – Dynamics and Governance Mechanisms

• 1.1 Introduction
• 1.2 Review of Financial Institutions and Systems
• 1.3 Governance Mechanisms
• 1.4 Core Incentive Problems and the Breakdown of Corporate Governance
• 1.5 Case Study
• 1.6 Conclusions

Unit 2 Strategic Drivers of Structural Change in Global Banking

• 2.1 Introduction
• 2.2 Financial Intermediation Dynamics
• 2.3 Structural Change in Global Banking
• 2.4 The Basics of Banking Strategies – A Simple Strategic Schematic
• 2.5 Drivers of Strategic Strengths and Weakness
• 2.6 Case Study
• 2.7 Conclusion

Unit 3 Strategy and Strategic Positioning

• 3.1 Introduction
• 3.2 A Tool for Strategic Thinking – The C-A-P Model
• 3.3 Globalisation, Regulation and Consolidation
• 3.4 Specialist versus Universal Banks
• 3.5 Sources of Competitive Advantage
• 3.6 Strategic Choices
• 3.7 Case Study
• 3.8 Conclusion

Unit 4 Acquisition and Use of Funds

• 4.1 Introduction
• 4.2 Sources of Bank Funding
• 4.3 Disintermediation and Competition from Non-bank Participants
• 4.4 Funding Models Before, During and After the 2007–09 Crisis
• 4.5 Case Study
• 4.6 Conclusion

Unit 5 Banks' International M&A Deals

• 5.1 Introduction
• 5.2 Reasons for M&A Transactions
• 5.3 Consequences of M&A Transactions
• 5.4 Financing M&A Transactions
• 5.5 Case Studies
• 5.6 Feedback on the Case Studies
• 5.7 Conclusion

Unit 6 Managing Bank Risk

• 6.1 Introduction
• 6.2 Risks Facing Banks
• 6.3 Management of Bank Risks
• 6.4 The Changing Nature of the Risks Facing Banks
• 6.5 Case Studies
• 6.6 Feedback on the Case Studies
• 6.7 Conclusions

Unit 7 Business Models and Systemic Risk

• 7.1 Introduction
• 7.2 Financial Crisis
• 7.3 Business Models
• 7.4 Risk Management Lessons from the 2007–09 Financial Crisis
• 7.5 The Future Shape of Banks
• 7.6 Case Studies
• 7.7 Feedback on the Case Studies
• 7.8 Conclusion

Unit 8 Dealing with Regulatory and Compliance Issues

• 8.1 Introduction
• 8.2 Contradictions and Trade-Offs in Regulation
• 8.3 Regulatory Options
• 8.4 Financial and Market Supervision
• 8.5 Regulation after 2007–09
• 8.6 Case Study
• 8.7 Conclusion

Module samples

• M466 Module Introduction (PDF)
• M466 Specimen Examination (PDF)
• M466 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

It is widely recognised by academic economists and policymakers that developed and efficient banking and capital markets are an important prerequisite for economic growth. However, it is also recognised that banking and financial crises can cause abrupt slowdowns or reversals of growth. The drive to understand these phenomena has generated a large body of research, leading to new theories and empirical studies of key features of banking and capital markets. This literature provides the underpinning for the subject material of this module.

Learning outcomes

When you have completed your study of this module, you will be able to:

• explain the functions of financial intermediaries, and evaluate the strengths and weaknesses of bank-oriented and market-oriented financial systems.
• critically evaluate theories of the banking firm which focus on the role of the bank as a provider of liquidity insurance for depositors, and as a delegated monitor of borrowers.
• explain the methods available to a bank to manage credit risk, interest rate risk, market risk and liquidity risk.
• explain why credit markets may fail to clear, and critically evaluate theories of credit rationing and overlending.
• discuss the methods used by shadow banking institutions to raise finance, and the risks to financial stability presented by shadow banking.
• critically evaluate methods for measuring the efficiency of banks, and the intensity of competition in deposits and loans markets.
• explain how a loss of depositor confidence, and asset price bubbles, can trigger banking and financial crises.
• critically evaluate the effectiveness of regulatory arrangements for the banking industry in promoting financial stability.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Matthews K and J Thompson (2014) The Economics of Banking. 3rd Edition. Chichester UK: John Wiley & Sons.
  Freixas X and J-C Rochet (2008) Microeconomics of Banking. 2nd Edition. Cambridge MA: The MIT Press.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Banks and Financial Markets

• 1.1 Introduction
• 1.2 Financial Intermediaries, Financial Markets, and the Flow of Funds
• 1.3 The Financial System and the Flow of Funds
• 1.4 Comparative Financial Systems
• 1.5 Law, Politics and Financial Systems
• 1.6 Bank-oriented versus Market-oriented Financial Systems
• 1.7 Conclusion

Unit 2 Financial Intermediation

• 2.1 Introduction
• 2.2 Principles of Financial Intermediation
• 2.3 Financial Intermediation and Transaction Costs
• 2.4 The Financial Intermediary as a Means of Alleviating Asymmetric Information Problems
• 2.5 The Financial Intermediary as a Liquidity Insurer for Depositors
• 2.6 Conclusion

Unit 3 Risk Management

• 3.1 Introduction
• 3.2 Interest Rate Risk
• 3.3 Market Risk
• 3.4 Credit Risk
• 3.5 Liquidity Risk
• 3.6 Conclusion

Unit 4 Credit Rationing

• 4.1 Introduction
• 4.2 Financial Repression
• 4.3 Credit Rationing due to Adverse Selection: The Stiglitz–Weiss Model
• 4.4 Over-lending
• 4.5 Credit Rationing due to Moral Hazard
• 4.6 Conclusion

Unit 5 Shadow Banking and Securitisation

• 5.1 Introduction
• 5.2 Shadow Banking: Entity-based Classification
• 5.3 Shadow Banking: Activity-based Classification
• 5.4 Traditional Banking and Shadow Banking
• 5.5 The Role of Shadow Banking in the Global Financial Crisis 2007–09
• 5.6 Regulation of Shadow Banking
• 5.7 Conclusion

Unit 6 Competition and Efficiency in Banking Markets

• 6.1 Introduction
• 6.2 The Theory of the Banking Firm
• 6.3 Measures of Competition in Banking
• 6.4 The Structure-Conduct-Performance Paradigm
• 6.5 The New Empirical Industrial Organisation
• 6.6 Measures of Banking Efficiency
• 6.7 Mergers and Acquisitions in Banking
• 6.8 Conclusion

Unit 7 Banking and Financial Crises

• 7.1 Introduction
• 7.2 Bank Runs in the Diamond and Dybvig Model
• 7.3 The Asian Financial Crisis 1997–98
• 7.4 Risk-shifting and Asset Price Bubbles
• 7.5 The Global Financial Crisis 2007–09
• 7.6 Deposit Insurance and Moral Hazard
• 7.7 Conclusion

Unit 8 Bank Regulation

• 8.1 Introduction
• 8.2 Systemic Risk
• 8.3 Lender of Last Resort
• 8.4 Deposit Insurance
• 8.5 Risk-adjusted Capital Adequacy Requirements
• 8.6 Stress Testing
• 8.7 Conclusion

Module samples

• M426 Module introduction (PDF)
• M426 Specimen examination (PDF)
• M426 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

This module on Corporate and Investment Banking has three main aims, to:

1. examine the financial needs of companies in relation to corporate and investment banking
2. illustrate the financial services provided by corporate and investment banks and how they support companies in their business
3. analyse the structure and management of corporate and investment banks.

The module examines corporate and investment banking from the point of view of companies that require financial support, and from the perspective of the banks that provide financial solutions. In this way you will develop a broader understanding of how corporate and investment banks operate, the factors that drive the demand for their services, how banks respond to the needs of clients, and how banks develop and maintain their competitiveness.

Learning outcomes

When you have completed this module, you will be able to:

• explain the core elements of corporate and investment banking services, and how these support non-financial firms
• discuss the roles that corporate and investment banks play in the fundraising process of a company
• assess the quality of the capital structure of a company, and discuss a variety of credit solutions
• analyse working capital, money management, and money management strategies
• assess the factors that drive the internationalisation of banking
• discuss the organisation, financial strategy and performance of the largest corporate and investment banks
• discuss the main sources of risk in the financial sector
• explain and develop risk management strategies using simple derivative contracts
• analyse and assess structured finance, including securitisation, credit derivatives, project finance, and mezzanine finance
• explain the steps in an initial public offering, IPO pricing, and the role played by the IPO underwriting syndicate
• discuss the key characteristics of private equity investments
• examine the role of investment banks in mergers and acquisitions.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Arnold G (2014) The Financial Times Guide to Banking. Harlow UK, Pearson Education Ltd.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 The Role of Banks in Corporate Business

• 1.1 Introduction
• 1.2 What is Banking?
• 1.3 Retail banking, Corporate banking and Investment Banking
• 1.4 The Demand for Corporate and Investment Banking
• 1.5 Conclusions

Unit 2 Corporate Banking: Lending

• 2.1 Introduction
• 2.2 Equity, Debt, and the use of Leverage
• 2.3 Optimising Capital Structure
• 2.4 Capital Raising: Debt and Bonds
• 2.5 Corporate Banking and Credit Risk Assessment
• 2.6 Conclusion

Unit 3 Money and Financial Management

• 3.1 Introduction
• 3.2 Production Cycles, Working Capital and Financial Management
• 3.3 Financial Solutions for Working Capital and Money Management
• 3.4 Domestic and Cross-border Payments
• 3.5 Cash Management and Clearing Strategies in Multinational Firms
• 3.6 Conclusion

Unit 4 International Banking

• 4.1 Introduction
• 4.2 Banking across Borders
• 4.3 National Banking Systems
• 4.4 Global Players in Corporate and Investment Banking
• 4.5 Corporate and Investment Banking: Performance and Market Share
• 4.6 Conclusion

Unit 5 Risk Management

• 5.1 Introduction
• 5.2 Risk Management in the Financial Sector
• 5.3 Main Risk Types
• 5.4 Economic and Available Capital
• 5.5 Derivatives Contracts
• 5.6 Conclusion

Unit 6 Structured Finance

• 6.1 Introduction
• 6.2 Structured Finance: Credit and Capital Market Convergence
• 6.3 Securitisation: From Originating-to-hold to Originating-to-distribute
• 6.4 Credit Derivatives
• 6.5 Project Finance
• 6.6 Mezzanine Finance
• 6.7 Conclusion

Unit 7 IPOs, Listing services and Underwriting syndicate

• 7.1 Introduction
• 7.2 Going Public: Why, When and Where?
• 7.3 What Should a Firm’s CEO and its Shareholders know before Going Public?
• 7.4 The Key Steps of the Listing Process
• 7.5 The Structure and Role of IPO Underwriting Syndicates
• 7.6 Assessing the Success of an IPO: the Cases of Facebook and Twitter
• 7.7 Conclusion

Unit 8 M&A, Private equity and Venture Capital

• 8.1 Introduction
• 8.2 Private Equity Investments: Definition, Classification and Types of Firms
• 8.3 The Private Equity Business Model
• 8.4 Mergers and Acquisitions
• 8.5 The Role of Investment Banks in Mergers and Acquisitions
• 8.6 Conclusion

Module samples

• M486 Module introduction (PDF)
• M486 Specimen examination (PDF)
• M486 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

This module examines the principles and practice of portfolio management, from the perspective of the individual investor, and the professional fund manager employed by an institutional investor, such as a mutual fund, pension fund, or hedge fund. Over a period of decades there has been rapid and far-reaching change in the investments industry. Deregulation and financial liberalisation, and developments in information and communications technology, have contributed to a massive expansion of financial markets and the development of new trading strategies. The downside of these developments was a financial crisis in the late 2000s of a magnitude not seen previously since the 1920s and 1930s. Several of the causes of this crisis can be traced directly to innovations in security design, trading strategies fuelled by leverage, a lack of transparency, and a widespread attitude of complacency towards risk among investors, financial intermediaries, and regulators.

The module uses and discusses several of the most important building blocks of financial economics theory, including the capital asset pricing model and the efficient markets hypothesis. A core principle running through the module is that investment decisions are taken in a context where higher returns can only be earned at a cost of accepting greater risk. To make good investment decisions, the individual or professional investor needs to consider their financial objectives or goals, their time horizons, and their willingness to tolerate risk. The trade-off between reward and risk is a recurring theme. We measure reward as the expected return on a security, and risk is measured using the variance or the standard deviation of returns.

Learning outcomes

When you have completed your study of this module, you will be able to:

• demonstrate knowledge of the types and functions of financial instruments, financial intermediaries and financial markets
• explain the use of Markowitz portfolio theory in constructing an investment portfolio that delivers an investor’s preferred combination of expected return and risk, and assess the limitations of portfolio theory as a practical tool for portfolio optimisation
• identify patterns of trading and asset prices that are inconsistent with the predictions of rational behaviour and the efficient markets hypothesis, and critically evaluate the explanation of these inconsistencies provided by behavioural finance
• explain the main tools of technical analysis and evaluate investment strategies derived from technical analysis
• discuss the distinction between passive and active investment styles, and critically evaluate the usefulness of the Treynor-Black and Black-Litterman models as practical tools for active investment
• assess the applicability of performance measures; attribute investment performance to components deriving from asset allocation, security selection and market timing; and explain the use of style analysis to identify a fund’s investment style.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Bodie Z, A Kane and AJ Marcus (2018) Investments. 11th Edition. McGraw-Hill.
• Module readings: We also provide you with access to academic articles and other reports and material that are assigned as core readings in the Study Guide. You are expected to read them as an essential part of the module. We have selected articles and reports which reinforce your understanding of the material in the Study Guide and textbook, and which also demonstrate how the methods you are studying are applicable and relevant in the investment industry.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Financial Planning, Financial Instruments, Risk and Return

• 1.1 Introduction
• 1.2 Financial Objectives, Time Horizons and Risk Tolerance
• 1.3 Money Market Securities
• 1.4 Bonds
• 1.5 Equity
• 1.6 Derivatives
• 1.7 Property and Commodities
• 1.8 Rates of Interest and Rates of Return
• 1.9 Measuring Reward and Risk
• 1.1 Treasury Bills, Government Bonds and Equities: The Historical Record
• 1.11 Conclusion

Unit 2 Financial Intermediaries and Investment Companies

• 2.1 Introduction
• 2.2 Financial Intermediaries
• 2.3 Types of Investment Company
• 2.4 Specialised Investment Companies and Vehicles
• 2.5 Pension Funds
• 2.6 Conclusion

Unit 3 Stock Markets and Benchmarks

• 3.1 Introduction
• 3.2 Privately-Held and Publicly-Held Companies
• 3.3 Primary Securities Markets
• 3.4 Secondary Securities Markets
• 3.5 Special Types of Transaction on Secondary Markets
• 3.6 The World’s Major Stock Exchanges
• 3.7 Regulation of Financial Markets
• 3.8 Leading Stock Market Indexes
• 3.9 Conclusion

Unit 4 Optimal Portfolio Selection

• 4.1 Introduction
• 4.2 Risk Aversion, and a Risk Adjusted Performance Measure
• 4.3 Probability Distributions for Returns
• 4.4 Portfolio Theory I: Portfolios Containing One or Two Risky Securities
• 4.5 Portfolio Theory II: Optimal Portfolio Selection for Portfolios of Many Risky Securities
• 4.6 Conclusion

Unit 5 Behavioural Finance

• 5.1 Introduction
• 5.2 Formation of Beliefs
• 5.3 Investor Preferences
• 5.4 Limits to Arbitrage
• 5.5 Applications of Behavioural Finance I: Aggregate Stock Market Puzzles
• 5.6 Applications of Behavioural Finance Ii: The Cross-Section of Stock Returns
• 5.7 Critique of Behavioural Finance
• 5.8 Conclusion

Unit 6 Technical Analysis

• 6.1 Introduction
• 6.2 Historical Foundations of Technical Analysis
• 6.3 Tools of Technical Analysis
• 6.4 Technical Trading Rules and Systems Based on Charts and Moving Averages
• 6.5 Evaluation of Technical Analysis
• 6.6 Conclusion

Unit 7 Passive and Active Portfolio Management

• 7.1 Introduction
• 7.2 Strategic and Tactical Asset Allocation
• 7.3 Fundamental Analysis
• 7.4 The Treynor–Black Single Index Model: Introduction
• 7.5 The Treynor–Black Model as a Tool for Portfolio Optimisation
• 7.6 The Black–Litterman Model
• 7.7 Conclusion

Unit 8 The Evaluation of Portfolio Performance

• 8.1 Introduction
• 8.2 Performance Evaluation: The Sharpe, Jensen and Treynor Measures
• 8.3 Performance Evaluation: Other Performance Measures
• 8.4 The Contribution of Market-Timing Ability to Performance
• 8.5 Performance Attribution
• 8.6 Style Analysis
• 8.7 Performance Evaluation for Hedge Funds
• 8.8 Conclusion

Module samples

• M487 Module introduction (PDF)
• M487 Specimen examination (PDF)
• M487 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

This module has been developed to equip you with the skills and knowledge to manage the financial needs of households. It is intended for professionals and academics, both practicing and aspiring, providing user-friendly technical tools for increased efficiency and effectiveness in your day-to-day professional life. Central to this module are two core issues:

• What are the financial needs of households (both those raised and those neglected due to financial illiteracy or behavioural biases)?
• How could a bank meet these financial needs, and why is it in its interests to do so?

Learning outcomes

When you have completed your study of this module, you will be able to:

• evaluate the role of household characteristics in household portfolio choices
• explain the functions of retail banking products and services
• discuss the principles of retail lending        
• analyse the determinants of mortgage choice
• examine the impact of banking competition on consumer welfare
• discuss the benefits and costs of relationship lending
• explain the main features of private banking products and services. 

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Pond K (2017) Retail Banking. 4th Edition. Hastings UK, Gosbrook Professional Publishing.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Household Wealth and Risk Preferences

• 1.1 Introduction
• 1.2 Household Intangible Wealth
• 1.3 Household Tangible Assets
• 1.4 Household Liabilities and Financial Crises
• 1.5 Household Risk Preferences
• 1.6 Conclusion

Unit 2 Household Portfolio Decisions: Allocation and Rebalancing

• 2.1 Introduction
• 2.2 Household Participation in the Stock Market
• 2.3 Household Portfolio Selection
• 2.4 Household Portfolio Rebalancing
• 2.5 Conclusion

Unit 3 Prospect Theory, Retirement Planning, and Financial Literacy

• 3.1 Introduction
• 3.2 Behavioural Finance and Investor Behaviour
• 3.3 Retirement Planning
• 3.4 Financial Literacy
• 3.5 Conclusion

Unit 4 Retail Banking: Banking Products and Channels

• 4.1 Introduction
• 4.2 Interest-based Products
• 4.3 Non-interest-based Banking Products for Households
• 4.4 Non-interest-based Banking Products for SMEs
• 4.5 Payment Services
• 4.6 Retail Banking Channels
• 4.7 Conclusion

Unit 5 Retail Lending and Household Borrowing

• 5.1 Introduction
• 5.2 Retail Lending
• 5.3 Household Borrowing: Mortgages
• 5.4 Mortgage Refinancing
• 5.5 Strategic Mortgage Default
• 5.6 The Credit Card Debt Puzzle
• 5.7 Conclusion

Unit 6 Retail Banking Competition

• 6.1 Introduction
• 6.2 Models of Competition in Retail Banking
• 6.3 Measuring Competition in Retail Banking
• 6.4 Evidence on Retail Banking Competition
• 6.5 Why Bank Competition Matters
• 6.6 Conclusion

Unit 7 Relationship Lending

• 7.1 Introduction
• 7.2 The Benefit of Long-term Bank-Borrower Relationships
• 7.3 The Cost of Long-term Bank-Borrower Relationships
• 7.4 Hard Information and Soft Information in Loan Pricing
• 7.5 Relationship Banking and Competition
• 7.6 Conclusion

Unit 8 Private Banking

• 8.1 Introduction
• 8.2 Private Banking Clients and Segmentation
• 8.3 Private Banking Products and Services
• 8.4 Tax Considerations
• 8.5 Industry Future and Trends
• 8.6 Conclusion

Module samples

• M488 Module Introduction (PDF)
• M488 Specimen Examination (PDF)
• M488 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules