CdLM Business Administration

The course aims to provide students with in-depth knowledge of the capital market,
for a valid preparation for work.

The module will be divided in two parts.

The first one will offer an in-depth knowledge of banking asset management:

- shares and bonds management;

- risk adjusted performance (RAP) ratios;

- selection of the optimal portfolio for the investor;

- economic theories

and will be supported by different exercises.

The second one discusses banks which are one of the major actors in capital markets. We begin by considering why banks are special, which involves identifying the roles banks play, such as, financial intermediation and asset transformation. Due to their special nature in the economy, banking has tended to be heavily regulated. We classify types of bank regulation and examine the rationale for regulation using an asymmetric information framework, which helps to identify unintended consequences of regulation. We assess the additional emphasis on risk management in banking following the GFC of 2007-09. Banks have tried to build a strong risk culture supported by governance arrangements linked to their risk appetite. While banks embed risk management in their decision-making, bank regulators address risk culture, risk appetite, and governance in regulatory standards. Next, we turn attention to the management of banks; specifically, we explain how banks are managed in terms of liquidity management, asset and liability management, capital management and capital adequacy. We end with a discussion of bank business models. We identify how researchers identify different bank business models and review empirical studies to determine the relative performance of these different bank business models.

By the end of the module, students should be able to:

FIRST PART

• Know the most important Bond and Stock theories.
• Calculate the optimal risky portfolio.
• Do asset management.
• Calculate the RAP ratios.

SECOND PART

• Appreciate the special role of banks in the economy.
• Understand why and how banks are regulated.
• Evaluate the main principles of bank management.
• Appraise the growing importance of risk management in banking.
• Identify different bank business models and evaluate their effects on bank performance.

Lectures and exercises.

Self-study based on the readings.

SUMMER EXAM 2021 

The summer exam will be organized online, as March - April 2021.

Therefore, the Exam will be divided into two parts:

1. Professor Williams will organize a special assignment for students. Theme and delivery time will be communicated by mail. Total Points Prof. Williams = 20

2. Professor Rovera will organize a Quiz on Moodle: 5 multiple choice questions (5 points) and 1 exercise (5 points). Total Time = 20 minutes. Total Points Prof. Rovera = 10

A teaching assistant will be available for exercises and questions.

Bond Analysis

- The market features.

- Supply and Demand of Bonds (curves).

- Fisher theory, Keynes theory and Friedman theory.

- Exercises.

Stock analysis

- The market features.

- The risky portfolio management:

• the Capital Asset Pricing Model
• the Modern Portfolio Theory
• the Risk Adjusted Performance Ratios.

- Exercises.

BANKS

• Why Banks are Special
• The Rationale for Bank Regulation
• Bank Management and Risk
• Managing the Bank: ALM and Liquidity Management
• Managing the Bank: Bank Capital and the Regulatory Architecture
• Bank Business Models

The documentation will be provided by the Professors during the course (in digital format on Moodle)

Students should make every effort to participate in the lectures. We strongly advise students to read the relevant material which will be on Moodle.