• Understand how central banks conduct monetary policy - setting of fed funds rates in the U.S. by the Federal Reserve System
• Calculate key financial ratios based on bank financial statements
• Determine interest rate on a traditional bank loan
• Estimate value of newly formed companies in financial services industry
• Explain functions of money management and investment banking industries

This course will analyze the main functions of banks and other financial institutions and review recent developments in the financial services industry.  We will examine the functions performed by incumbent players in the following segments: extension of credit to businesses and consumers, payment processing, money management, investment banking and securities trading; attention will then turn to new industry players - those companies that are using digital technologies and big data to disrupt traditional players’ business models. Potential market size, product pricing and profitability of the new players will be evaluated. 

It is assumed that students have good working knowledge of the basic theoretical and practical concepts of economics, accounting, and finance. The course is intended not only for those interested in careers within financial institutions, but also for those who wish to extend their institutional and industry specific knowledge.

Preliminary assignment: Submit Entry Quiz - checking on basic accounting and finance knowledge; answer key and solutions will be provided;

Class 1: Financial institutions and their functions

Class 2: History of the U.S. banking industry; Case:  The U.S. Banking Panic of 1933 and Federal Deposit Insurance

Class 3: Central Banking - Federal Reserve System; Monetary Policy and Its Tools;

Class 4: Measuring financial performance of financial intermediaries; Bank capital requirements;

Class 5: Traditional lending and product pricing; Case: Santa Fe Trading Company;

Class 6: Innovations in lending and alternative finance; Case: Lending Club;

Feedback activity: Sample midterm exam with answer key and solutions provided; midterm will be in the same format as the final examination;

Class 7: Payment function: from the bill of exchange to Visa/MasterCard to Bitcoin

Class 8: Investment and money management; Case:  Betting on Failure: Profiting from Defaults on Subprime Mortgages 

Class 9: Review of insurance industry;

Class 10: Review of investment banking industry; Case: The Tip of the Iceberg: JP Morgan Chase and Bear Stearns 

Class 11: Regulation of financial industry in the post-crisis period

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.

Course timetable is available on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams

We reserve the right to cancel the course if we do not get enough applications. This will be communicated on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams end February 2019 at the latest.

Mandatory readings:

Purchase at HBS Publishing at this link: 
https:/​/​hbsp.harvard.edu/​import/​582543

Additional relevant readings:

The following articles are available at the Bank of England web site:

• Money in the modern economy: an introduction. By Michael 
McLeay, Amar Radian and Ryland Thomas. Bank of England Quarterly Bulletin, 2014 Q1
• Money creation in the modern economy. By Michael McLeay, Amar Radia and Ryland Thomas. Bank of England Quarterly Bulletin, 2014 Q1
• Innovations in payment technologies and the emergence of digital currencies. By Robleh Ali, John Barrdear, Roger Clews and James Southgate Bank of England Quarterly Bulletin, 2014 Q3
• The economics of digital currencies. By Robleh Ali, John Barrdear, Roger Clews and James Southgate. Bank of England Quarterly Bulletin, 2014 Q3
• Insurance and financial stability. By Andrea French and Mathieu Vital, Bank of England Quarterly Bulletin, 2015 Q3
• Investment banking: linkages to the real economy and the financial system. By Kushal Balluck, Bank of England Quarterly Bulletin, 2015 Q1
• Stress testing of banks: an introduction.  By Kleran Dent and Ben Westwood.  Bank of England Quarterly Bulletin, 2016 Q3
• Bank capital and liquidity.  By Marc Farag and Damian Harland. Bank of England Quarterly Bulletin, 2013 Q3