MGT 184: Money & Banking

Undergraduate Course, Fall 2017

PROFESSOR: PARASHAR, SAT PAUL

EMAIL: spparashar@ucsd.edu
PHONE: (714) 325-4170
OFFICE LOCATION: TBA
OFFICE HOURS: Wednesday, 1:00pm- 1:45pm

TA /Tutor: TBA
EMAIL: TBA
PHONE: TBA
OFFICE HOURS : By appointement

Note: This syllabus may be revised in the light of student feedback and suggestions in
the first session on October 4, 2017. Please check TritonEd for latest version.

COURSE TIMES AND LOCATION

The class time is Wednesday morning from 2:00 PM to 4:50 PM and we will use the
Otterson Hall 1S113.

COURSE DESCRIPTION

Hope you would agree that money and banking concerns everyone. To gauge its
importance, you may evidence that both, the House and the Senate, have separately
constituted a committee to monitor monetary and banking policy in the country. Money
and banking, indeed, concerns households, businesses and Government. Cash is said
to be the life blood of business. No business idea can flourish without money. Where to
mobilize money and where to invest? These are the questions perennially facing the
businesses and determine their continued growth and success.

As you may know, all management decisions are contextual. The context and
environment of business play a critical role in business decision making. So, should
businesses raise money through stocks and bonds or bank loans would, more than
anything else, depend on the structure of financial markets in which they operate.
Financial markets comprise investors, borrowers, regulators, financial products,
processes and services. It is interesting to note that despite great development of
capital markets around the globe, banks and financial intermediaries still constitute the
predominant component of the financial markets in, both, developed and emerging
markets of the world including USA, Canada, Japan, Germany, India and China. The
global economic and financial crisis of 2007-09 have once again brought the role of
money and banking to the fore. Cash is King, when the need is urgent and Cash is
trash, when un-deployed have come to exist, side-by-side.

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 The economic growth, inflation, unemployment, money supply, money multiplier and
velocity, bank credit and currency exchange rates concern everyone. The
entrepreneurs, managers and leaders of businesses, as much as lenders, investors,
financial regulators and legislators, need to know more than ever before the business of
money and banking. Who creates and controls money supply in the economy? What
role do Federal Reserve, banks and household play in the process of money creation?
Who regulates banks and why? What are the emerging trends, challenges and
opportunities facing banks? What is the relationship between Main Street and the Wall
Street? Between money supply and bank credit, which one plays bigger role in real
economy? How do money and banking concern participants of this course here? What
role do they foresee for themselves in this domain? This course is aimed to address
these and related questions with the following objectives and intended learning
outcomes.

COURSE OBJECTIVES (INTENDED LEARNING OUTCOMES)

At the end of this course, students would be able to:

Describe money and its functions
Discuss national and international financial system and structure
Discuss process of money supply and its implications for real economy in terms
of GDP, inflation, employment and exchange rates
Explain role of, and tools used, by Fed, FDIC, OCC for money and banking
regulation
Analyze the role of banks and bank credit in national economy
Discuss national and international regulation of banks and financial institutions,
including Basel-I,II, III, Dodd-Frank Wall Street Reform and Consumer Protection
Act, 2010, Financial CHOICE (Creating Hope and Opportunity for Investors,
Consumers and Entrepreneurs) Act, 2017 (in making).
Explain financial crisis and subprime meltdown of 2007-09 and what lessons can
we learn from it
Identify challenges and opportunities facing banks in the post-crisis period
Contrast business, lenders and regulatory perspectives on money and banking

COURSE PEDAGOGY
The course will utilize lectures, discussion, case examples, experience sharing,
Individual and Group project assignments and presentations.
Guest Speaker (Mr Mohnish Pabrai, Chief, Pabrai Investment Funds, Irvine, CA)

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 COURSE MATERIALS

The text book for this course is:

The Economics of Money, Banking and Financial Markets-Business School Edition, 4th
Edition 2016, Mishkin, Frederic S, Pearson.

The suggested readings and class schedule are given in the attached course outline.
Additional readings may be announced later. Each student is expected to have
completed the reading for each class before the class starts. Project assignments will
be turned in as per schedule. Each student is expected to be prepared to contribute to
the classroom discussion. (See below.)

ATTENDANCE
You are expected to attend every class; you are responsible for the material covered in
class whether or not you attend.

EVALUATION AND GRADING

Students will be evaluated based on performance in their areas of effort:

i. Literature Review (12%) There will be a literature review assignment to be

handed in as per schedule. Literature Review will involve review of a book or a
research journal article or a regulatory publication concerning money and
banking, published in 2017 or around 1930; submitting (i) a reference of the
literature reviewed, with your name, (ii) its summary and (iii) your learning(s) to
TA and (iv) sharing summary and learning(s) with the class. It will be Individual
assignment. Word limit for summary and learning (s): 500- 800.

Important Dates:
Choose and announce your literature for review to TA by November 1, 2017, 12
Noon.
Review report submission by November 7, 2017, 5:00pm. Your review report
MUST clearly show (i) Your Name (ii) Complete Reference of Literature
Reviewed (iii) Summary and (iv) Lessons Learned

Presentation in class on November 8, 2017, 2:00pm.

Grading of Literature Review:

Complete Reference of Literature Reviewed and Summary of Literature
Reviewed (4%);
Lessons Learned, as Student of Money and Banking, from Literature Review
(4%); Summary and Learning (s) presentation to the class (4%).

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 Possible Sources of Regulatory Publications for Review:
Publications of Fed Reserve, FDIC, OCC, CFPB, Bank for International
Settlement, Senate Banking Committee, House Financial Services Committee.

II) Group Project Work (16%) - There will be a team project. Each team will have
3- 5 members, depending on final number of students. Team Project will comprise
seven components:
i. Rationale of Research (Grade: 2%)
ii. Literature Review (Grade: 2%)
iii. Data Collection and Analysis (Grade: 2%)
iv. Major Findings & Conclusion (Grade: 2%)
v. Announcement of Team and Research Question to TA by November 22,
2017, 12 Noon (Grade 1%)
vi. Submission of Written Report and Slide Deck to TA by December 5, 2017,
5:00pm (Grade: 3%). Word/ Slide Limit: None.
vii. Class Presentation (with Slide Deck) on December 6, 2017 (Grade: 4%).
Slide Limit: TBA

Possible Topics for team project:

1. How do District Federal Reserve Banks differ from each other?
2. US Monetary Base, Money Supply and Money Multiplier over 2007- 2017: An
Analysis
3. Should the target federal funds rate, over the Q4 of 2017 and Q1 of 2018, be
reduced, increased or left as it is in the Q3 of 2017?
4. US Banks over 2007- 2017: An Analysis
5. US Shadow Banking over 2006- 2017: An Analysis
6. US online- only banks: an Analysis
7. Bitcoin: Its future?
8. How effective has been US Monetary policy since 2008?
9. How effective has been US financial regulation since 2008?
10. Dodd-Frank Act, 2010 Vs CHOICE Act, 2017 (in making)
11. Any other

iii) MID TERM (20%) - There will be a mid-term examination on Wednesday,

November 8, 2017, 3:45pm- 4:45pm. It will be all MCQs and closed book exam. It
can cover all text, readings, cases, home work and class discussions up to that time.

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 iv) FINAL EXAM (40%) - There will be a 2 hour final exam. It will cover all text
readings, cases, and class discussions during the quarter. The Final Exam will be
held on December 13, 2017, 2:00pm- 4:00pm. It will be MCQ, short questions and
computation questions exam. It will be closed book exam.

v) Class Participation (10%) 3% for 7/10 attendance; 5% for 8/10 or more

attendance; 0% for less than 7/10 attendance; 5% for Q/A, experience sharing.

Note: Attendance Sheet will be circulated in the beginning of each session by

TA. It will be the responsibility of each student to mark attendance. TA will
update cumulative attendance records at the end of each session and each student
can see his/her attendance records with TA, by appointment.

vi) CAPE (2%) Complete and submit to the concerned office, and Inform at
spparashar@ucsd.edu

EXAM RETAKE: There will be no exam retake allowed, except on medical grounds
and with prior information and approval.

REGRADING OF TESTS: The TA and me will be happy to look over your Midterm
or Final subject to the following:
1) The request must be made within one week of the test.
2) The entire test will be re-graded
This means that your test score could go up or down

Please note: All exams are to be completed individually so collaboration among

students is not allowed.

COURSE OUTLINE

Wednesday, October 4, 2017 Course Introduction

Why study Money & Banking? Chapter 1
What is Money & Banking? Chapter 3

Wednesday, October 11, 2017 Overview of Financial System Chapter 2

International Financial System Chapter 21

Wednesday, October 18, 2017 Money Supply Process Chapters 17

Monetary Policy Theory Chapter 24
Additional Reading: Alan M Taylor, The Great Leveraging, 2012

Wednesday, October 25, 2017 Tools of Monetary Policy Chapter 18

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 Conduct of Monetary Policy Chapter 19
Transmission of Monetary Policy Chapter 25
Additional Reading: Ben S. Bernanke, Economic Policy: Lessons
from History, April 8, 2010

Wednesday, November 1, 2017 Financial Structure Chapter 8

Banking Industry Structure Chapter 11

Wednesday, November 8, 2017 Turning in Literature Review

(November 7, 2017)
Literature Review Presentation
(2:00pm- 3:40am)
Midterm Exam (3:45am-4:45pm)

Wednesday, November 15, 2017 Mid Term Exam Review

Management of Banks and Chapter 9
Financial Institutions
Additional Reading: Quarterly Trends for Consolidated U.S.
Banking Organizations, Third Quarter 2017, Federal Reserve
Bank of New York

Wednesday, November 22, 2017 Conflict of Interest in Chapter 15

Financial Industry
Financial Regulation Chapter 10
Additional Reading: Dodd Frank Act, 2010 Vs CHOICE Act, 2017
(in making)

Wednesday, November 29, 2017 Financial Crisis and Chapter 12

Sub-prime Meltdown
Non-bank Finance Chapter 13
Additional Readings:
Global Shadow Banking Monitoring Report 2017, Financial
Stability Board
Arturo Estrella and Frederic S. Mishkin, The Yield Curve as a
Predictor of U.S. Recessions, 1996

Wednesday, December 6, 2017 Turning in Group Project Presentations

(December 5, 2017)
Group Project Presentations
Course Review

Wednesday, December 13, 2017 FINAL EXAM (2:00am- 4:00am)

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 ACADEMIC INTEGRITY

Integrity of scholarship is essential for an academic community. As members of the

Rady School, we pledge ourselves to uphold the highest ethical standards. The
University expects that both faculty and students will honor this principle and in so doing
protect the validity of University intellectual work. For students, this means that all
academic work will be done by the individual to whom it is assigned, without
unauthorized aid of any kind.

The complete UCSD Policy on Integrity of Scholarship can be viewed at:

http://senate.ucsd.edu/manual/appendices/appendix2.pdf

How the Honor Code applies to this course:

Individual Projects and Mid Term and End Term Exams demand individual scholarship
and efforts.
Team Project requires team work.

STUDENTS WITH DISABILITIES

A student who has a disability or special need and requires an accommodation in order
to have equal access to the classroom must register with the Office for Students with
Disabilities (OSD). The OSD will determine what accommodations may be made and
provide the necessary documentation to present to the faculty member.

The student must present the OSD letter of certification and OSD accommodation
recommendation to the appropriate faculty member in order to initiate the request for
accommodation in classes, examinations, or other academic program activities. No
accommodations can be implemented retroactively.

Please visit the OSD website for further information or contact the Office for Students
with Disabilities at (858) 534-4382 or fosorio@ucsd.edu.

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