This unit provides undergraduate students with the knowledge and a greater understanding of the central issues and principles underpinning recent developments in the global regulation and supervision of banking/financial institutions. The concept of financial stability as the goal of public policy and the rationale for prudential regulation and supervision of banks is discussed first. Students are then exposed to a range of concepts and issues pertaining to the measurement, management and prudential regulation of key risks in banking (i.e. market risk, credit risk, operational risk, liquidity risk). Other elements in the unit entail discussion and examination of issues relating to the concept of capital adequacy and risk-based capital ratios with particular reference to Basel Capital Accords; the Basel Core Principles for Effective Banking Supervision; different national approaches to regulation and supervision of banks; government financial safety nets (i.e.'Lender of Last Resort' and depositor protection schemes); post-crisis structural banking reform proposals.
1x 2hr lecture and 1x 1hr tutorial per week
mid-semester exam (30%); tutorial exercises (10%); group project (20%); final exam (40%)
BANK2011 or ECOS2004 or FINC2011