MBA Course in Commercial Banking

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Jamal Munshi PhD, All rights reserved

The course
It is an intensive workshop oriented course. Students learn what a bank is, what role it plays in the financial sector of the economy, and how it carries out this role. Bank managers face a complex nexus of risks and tradeoffs with severe regulatory constriants. Students learn how managers carry out these functions and how we may evaluate their performance. Students are expected to have completed courses in the fundamentals of finance, accounting, and statistics. The course is quantitative in nature and it requires proficiency in mathematics and in Microsoft Excel. Proficiency in written English is also important.
Textbook
Peter S. Rose, Commercial Bank Management
Irwin McGraw-Hill, ISBN 0071121226
Classroom activities
There are 8 class meetings on 8 consecutive weeks, one day per week, and one scheduled final examination period.
There may be up to three activities per meeting
Activity #1: Quiz on previous topic: 1 hour
Activity #2: Lecture on new topic: 1.5 hours
Activity #3: Workshop on new topic: 1.5 hours
Meeting #1
Workshop #1: Overview of the banking industry
To prepare for workshop #1 please read chapter 3
Meeting #2
Quiz #1: The banking industry
Workshop #2: Financial statements of banks
To prepare for workshop #2 please read chapter 4
Meeting #3
Quiz #2: Financial statements of banks
Workshop #3: Measures of bank performance
To prepare for workshop #3 please read chapter 5
Meeting #4
Quiz #3: Measures of bank performance
Workshop #4: Gap management
To prepare for workshop #4 please read chapters 6 and 7
Meeting #5
Quiz #4: Gap management
Workshop #5: Hedging with futures, options, and swaps
To prepare for workshop #5 please read chapter 8
Meeting #6
Quiz #5: Hedging strategies
Workshop #6: Business loans
To prepare for workshop #6 please read chapters 17 and 18
Meeting #7
Quiz #6: Pricing business loans
Workshop #7: Consumer and real estate loans
To prepare for workshop #7 please read chapters 19 and 20
Meeting #8
Quiz #7: Pricing consumer loans
Workshop #8: International banking services
To prepare for workshop #8 please read chapter 23
Scheduled final examination period
Quiz #8: International banking
Semester project (select one)
Comparative bank performance case study: Excel model, report, and presentation
Business load pricing case study: report and presentation
Assignment types
The class is divided into groups. Workshops and semester projects are group assignments. They are carried out cooperatively by group members working as a team. The instructor serves as an ex-officio member of each group. Quizzes and examinations are individual assignements. Please do these on your own. You are expected to complete your quiz without using your book or notes. Please turn in your workshop before you take the quiz. For group assignments submit one paper per group. For individual assignments submit one paper per student.
Missed workshops and quizzes
Once per term, the student may carry the weight of a missed workshop forward to the next workshop. Once per term, the student may carry the weight of a missed quiz forward to the next quiz. There is no provision for make-up workshops or quizzes.
Evaluation of learning
8 Workshops x 4 points each = 32 points
8 In-class short quizzes x 8 points each = 64 points
Semester project = 4 points
Total = 100 points
Letter grade: 90-100 = A, 80-90 = B, 75-80 = B-, 60-75 = D, else F
Outcomes
After completing this course you should be able to answer the following questions:
  • What are commercial banks and what function do they carry out in the financial sector of the economy?
  • How are banks organized and how does the organizational form affect bank performance?
  • What information is found on the bank's balance sheet and income statement and what do they tell us about the bank?
  • How can the information in the financial statements of banks be compared?
  • What are the objectives and tradeoffs in bank management and how may these be evaluated and compared using ratio analysis?
  • What do bankers mean by interest rate risk, duration, and gap management?
  • Why do banks face interest rate risk and how can bank managers use asset and liability management to control this risk?
  • What interest rate derivatives are available and how do they work?
  • How may interest rate futures, options, and swaps be used for gap management?
  • What is bank capital, why is it important, and how is it managed?
  • What are some characteristics and issues with regard to the loan portfolio of banks and what management priorities do they imply?
  • What are business loans, how are they valued, and how should the business loan portfolio be managed?
  • What are consumer loans, how are they valued and managed?
  • What are real estate loans, how are they valued and managed?
  • What are international banking functions and how are they managed?

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