Kuwait University
College of Business Administration
Dept. of Economics
Money and Banking: Econ. 212.
Prof. Mohammed I. El-Sakka
Syllabus
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1 -COURSE OBJECTIVES:
This course aims at enabling students to understand the main issues related to money,
banking, monetary policy and financial markets. Specifically, the course provides students with
general background information and analytical tools pertaining to:
1.
The notion of Money, functions and measurements.
2.
Financial market functions, structure and instruments
3.
Commercial bank functions, assets, liabilities, and liquidity management.
4.
Central bank functions, and control of monetary base
5.
Money supply process, multiple deposit creation and money multiplier
6.
Interest rates, returns, risk and financial assets prices.
7.
Foreign exchange markets, exchange rates, determinants of exchange rates in the
long and short run
8.
Demand for money theories and applications
9.
Inflation concept, money supply growth, high employment targets and budget
deficit
10. Tools of monetary policy, targets and goals
2 – COURSE OUTLINE:
Chapter 1. What Is Money?, 53-68
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Meaning of Money,
Functions of Money,
Evolution of the Payments System,
FYI: Are We Headed for a Cashless Society?,
Measuring Money,
Chapter 2. An Overview of the Financial System, 25-52
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Function of Financial Markets,
Structure of Financial Markets,
Money and Capital Markets,
Financial Market Instruments,
Money Market Instruments,
Capital Market Instruments,
Internationalization of Financial Markets,
Function of Financial Intermediaries: Indirect Finance,
Asymmetric Information: Adverse Selection and Moral Hazard,
Types of Financial Intermediaries,
Regulation of the Financial System,
Chapter 3. Banking and the Management of Financial Institutions, 225-254
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The Bank Balance Sheet,
Basic Banking,
General Principles of Bank Management,
Managing Credit Risk,
Managing Interest-Rate Risk,
Chapter 4. Central Banks : A Global Perspective, 315-344
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The Price Stability Goal and the Nominal Anchor,
Other Goals of Monetary Policy,
Should Price Stability be the Primary Goal of Monetary Policy?,
How Independent is the Fed?,
Should the Fed Be Independent?,
Chapter 5. The Money Supply Process, 345-366
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Three Players in the Money Supply Process,
The Fed’s Balance Sheet,
Control of the Monetary Base,
Multiple Deposit Creation: A Simple Model,
Factors That Determine the Money Supply,
Overview of the Money Supply Process,
The Money Multiplier,
Chapter 6. Tools of Monetary Policy, 373-391
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The Market for Reserves and the Federal Funds Rate,
Open Market Operations,
Discount Policy,
Reserve Requirements,
Chapter 7. The Foreign Exchange Market, 433-446
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Foreign Exchange Market,
Exchange Rates in the Long Run,
Exchange Rates in the Short Run: A Supply and Demand Analysis,
Explaining Changes in Exchange Rates,
Appendix to Chapter 20. The Interest Parity Condition,
Chapter 8. The Demand for Money, 497-516
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Quantity Theory of Money,
Keynes’s Liquidity Preference Theory,
Further Developments in the Keynesian Approach,
Friedma’s Modern Quantity Theory of Money,
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Distinguishing Between the Friedman and Keynesian Theories,
Chapter 9. Money and Inflation, 617-638
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Money and Inflation: Evidence,
Meaning of Inflation,
Views of Inflation,
Origins of Inflationary Monetary Policy,
Chapter 10. Understanding Interest Rates, 69-85
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Measuring Interest Rates
The Distinction Between Interest Rates and Returns
The Distinction Between Real and Nominal Interest Rates
Chapter 12. The Behavior of Interest Rates, 91-101
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Determinants of Asset Demand
Supply and Demand in the Bond Market
Changes in Equilibrium Interest Rates,
Supply and Demand in the Market for Money: The Liquidity Preference Framework
3 – EVALUATION SYSTEM
1st mid term
18/10/2015
2nd mid term 6/12/2015
7 quizzes (6 to be selected)
Final exam (comprehensive)
Total
4 – GRADING
A
AB+
B
BC+
C
CD+
D
F
95+
90-94.5
87-89.5
83.5-86.5
80-83
77-79.5
73.5-76.5
70-73
65-69.5
60-64.5
< 60
20
20
10
50
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100
5 - REFERENCES:
Fredric S. Mishkin (2010) "The Economics of Money, Banking, and Financial Markets" by Pearson,
9th Edition. (Required).
6 - OFFICE HOURS
Saturday, Monday, and Wednesday 10.30–11.30 am weekly.
Students are served on a first-come first-serve basis. If more than one student are seeking help,
each student will be allocated a maximum of ten minutes. In case a student needs additional
time, an appointment at a later time is fixed so as to allow other waiting students to be
assisted. Telephone calls are only allowed in emergencies.
7 - WEBSITE
There is a web site for this subject in my home page: http://www.cba.edu.kw/elsakka
8 - GENERAL INFORMATION
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Absenteeism: university regulations governing absenteeism are applied to all students.
This involves a first warning after 3 hours, a second warning after additional 3 hours
absence and a failure notice for any absence beyond the six hours. It should be noted,
however, that students may lose marks as a result of absenteeism
- Tardiness: students are expected to be in the lecture hall on time. Students showing
signs of tardiness shall be warned for the first time and subsequently barred from the
lecture.
- Make up policy: students who are unable to attend an exam due to illness or other
extenuating circumstances (appropriate documents are required to verify the indicated
circumstances) may request a make-up exam.
- Plagiarism and cheating are strictly prohibited by university policies as well as academic
ethics.
- This course heavily uses Internet as a teaching aid. Students should be equipped with
basic skills of WWW Internet search and electronic mail system. Those who want to
receive Internet assignments and answers by e-mail should register their e-mail address
in my home page “http://www.cba.edu.kw/elsakka“.
- For electronic mail message you can use one of the following E-mail addresses:
elsakka2006@gmail.com
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WARNING:
MOBILE PHONES SHOULD ALWAYS BE CLOSED DURING LECTURES
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