Course Outline

CUHK – Econ 3410B Money & Banking 

Spring 2014 

ECON 3410B MONEY AND BANKING Course Outline Time and Location: Mon 2:30 PM – 4:15 PM, Wed 1:30 PM – 2:15 PM, ELB LT4 Instructor: Yin-Chi Wang ([email protected], ELB 932) Office Hours: Mon 1:15 – 2:15 PM or by appointment The fastest way to reach me is via email. If you want to see me and cannot come during my office hours, please send an email to set up an appointment with me. All correspondences must be made either via email or in person. All the course materials will be made available on the CUHK eLearning system.

Teaching Assistant, TA Email and TA Office Hours: Yousha Liang ([email protected]) Office hour: Thu 11:00 AM – 12:00 AM, ELB 1003 Chenqi Zhu ([email protected]) Office hour: Wed 12:30 PM – 1:30 PM, ELB 1001 Zhang Wu ([email protected]) Office hour: Tue 4:00 PM – 5:00 PM, ELB 1001

Course Description: This course covers three topics: financial markets, interest rates, and commercial banking. Upon completion, you should be able to:        

Explain the basic structure of financial markets. Understand the time value of money and use the present-value framework to price bonds. Discuss theory/evidence about financial-market efficiency and the implications for financial-market behavior. Identify the factors that determine the real interest rate and explain how monetary policy affects the inflation rate and the nominal interest rate in the short and long run. Discuss the relationship between monetary institutions and monetary policy, highlighting the impact of specific monetary regimes on the inflation rate. Explain the fundamental principles of bank management and discuss recent trends in the structure of the banking industry. Offer a rationale for government supervision of the banking industry. Use the tools and concepts learned in this course to analyze current events.

Prerequisites: ECON 2011 and ECON 2021. Students are expected to know basic accounting as well.

Readings: Required: The Economics of Money, Banking and Financial Markets, by Frederic Mishkin, 10/E Supplementary:

Money, Banking and Financial Markets, by Stephen Cecchetti Other materials assigned 1

 

CUHK – Econ 3410B Money & Banking 

Spring 2014 

Evaluation: Your overall performance will be evaluated based on: Midterm 30% Final exam 40% Group project and presentation 25% Class participation 5%

17 Feb 14 Apr

Midterm and Final Exam Both the midterm and the final exam are given in class. No make-up for the midterm exam. The percentage weight of the missed midterm will be shifted to the final. If you miss the midterm exam or the final exam, you must submit official documentation to me within one week of the exam date. For medical reason, you must provide a medical note from the University Health Service. If you have a medical note from other places, you must go to the University Health Service to have them endorse the medical note. If you cannot attend the exam due to emergencies, you need to send an email to me BEFORE the exam. Later on you need to provide proofs for your absence. For any other reason, you have to get approval from me with supporting evidence before the exam. Failing to observe the rule will result in a complete loss of the weight allocated to the exam. Your final exam is comprehensive and it will cover all the materials discussed during the semester. Both the midterm and the final exam are closed books and notes. You are allowed to bring a non-graphing calculator with basic scientific functions to the exams. You have to bring your University photo ID to attend the quizzes and the final exam.

Group project and presentation There will be a group project this semester. Each of the group shall consist of 5-6 people. Once you have formed the group, you should report to your TA the group members and the contact information of your group before 27 January. You have to decide the topic of your project with your group members, and report to your TA by 19 February. Each group will have a designated TA. You shall expect to meet your TA twice to have your progress checked throughout the semester. The meeting schedule and the designated TA will be announced on the eLearning system. The in-class presentation will be held on 31 March, and 2, 7, 9 and 16 April, 2014 (tentative, subject to the size of the class). Each group has 10-15 minutes to present. A score sheet will be handed out to all groups for peer evaluation. Also, an in-group evaluation form will be handed out to all of you to evaluate your contribution as well as the contribution of your group members. After the presentation, each group has to turn in your report (not to exceed 12 pages). Your grade for the group project will be based on your presentation (40%) and the report (60%). Suggested topics for group project: 1. Pick a country and study the history of its central bank and its monetary policy. Or analyze selected important events or disruptions in the financial markets of your chosen country, and discuss how its central bank responded to the events. 2. Study the development of "new" money, such as mobile money in developing countries, bitcoin, etc. 3. Current events, such as whether to change the exchange rate system in Hong Kong, the impact of the ending of the quantitative easing, the interest rate reform in China, etc. 4. Other topics.

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CUHK – Econ 3410B Money & Banking 

Spring 2014 

Timetable: Tentative, subject to changes. Week 1 Syllabus overview and introduction for the financial system Week 2 Money and the payment system Week 3 & 4 Present value and the interest rate Week 5 Lunar New Year Vacation Week 6 Risk and term structure Week 7 Midterm Exam (17 Feb)/Banking and management of financial institutions Week 8 & 9 Central Banks and the money supply Week 10 Tools and conduct of monetary policy Week 11 & 12 Monetary theory Week 13 & 14 Group presentation Week 15 Final exam (14 Apr)/Group presentation

***The instructor reserves the right to make revisions to the syllabus.***

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