Course Title: Financial Institutions

Semester: Fall 2020 IIIA Class: MBA Class of 2021

Instructor: Samir Ahmed Email: samir.ahmed@lums.edu.pk

sahmed600@gmail.com

Room # 441 Telephone: 0302-8260359

Office Hours: TBA AA/TA Arfa Hamad

COURSE OVERVIEW
Course Description:

The course focuses on the financial sector and its component financial institutions in a modern
economy. The financial sector comprises of a fairly large variety of financial institutions. The course
covers in some depth most of these institutions - their nature, role, functions and the current issues
affecting them. The coverage includes Multilateral Financial Institutions, Commercial Banks,
Investment Banks, Insurance Companies, Venture Capital Companies, Sovereign Wealth Funds,
Pension Funds, Micro Finance Institutions etc. To conclude there is a session on Fintech, its
significance and the challenge it poses to the existing landscape. The course has a Global and
International perspective and also adds a local context for richness and relevance.

Course Organisation:

Broadly speaking, the course can be divided into five modules:

Module 1(Sessions 1-2): Overview of the Financial System.

An overview of the Financial Sector and its critical role in an economy. The dynamic nature of the
sector is highlighted, characterized, as it has been, by rapid change and evolution, especially in the last
few decades. To emphasize and understand the global nature of the sector, the role of multilateral
financial institutions is also included.

Module 2 (Sessions 3-4): Commercial Banking.

The Universal Bank model is studied in some detail, including the main areas of activity, the evolution
of the model in recent times and the challenges it faces. Then the focus moves to the most critical and
core area of banking - Lending and Risk Management.

Module 3 (Session 5): Investment Banking

The standard US Investment Banking model is introduced, with a focus on the role and function of the
investment banking sector and its historical evolution. The sector is undergoing significant change in
the post 2007-08 scenario and these changes are studied in some detail.

Module 4 (Sessions 6-9): Asset Management

There is a very wide range of asset management institutions, from run of the mill retail mutual funds to
hedge funds for sophisticated institutional investors. First the Venture Capital model is studied, in its
generic form and in its actual implementation in an emerging market context. Next is the specialized
vehicle of a Real Estate Investment Trust with a case on Pakistan’s first REIT. Next, the attention
moves to Sovereign Wealth Funds, a class of funds which came into the limelight in the 2007-08 crisis,
COURSE OVERVIEW
although these have been around for much longer. Finally we look at Pension Funds which are a very
significant factor in the more developed financial systems (though less so in emerging markets) and
which are experiencing some unique issues in the current global economic scenario.

Module 5(Sessions 10-11) Other Financial Institutions.

In this module two different kinds of Financial Institutions are studied. These are both very important in
their own right and no study of Financial Institutions would be complete without these. First the
Insurance industry is studied with a focus on both Life and Non-Life insurance. Next is the relatively
new area of Micro Finance is looked at, where the focus is on the provision of financial services to the
poor and the under privileged, the so called bottom of the pyramid.

Module 6 (Session 12-13)

There are two sessions in this module focusing on Fintech. The technology revolution is affecting all
businesses all over the world. We look at the evolution of Fintech, the inroads it has made and the
challenges it poses to the traditional business models of Financial Institutions.

LEARNING OUTCOMES
Upon successful completion of the course, the students should be able to:

1. Appreciate and evaluate the role and importance of the Financial Sector and Financial
Institutions in their broader economic context.
2. Apply their knowledge of the various types of Financial Institutions and the nature of their
operations, to identify and analyze the key managerial issues.
3. Show an awareness of the dynamic and evolving nature of the Financial Sector and Financial
Institutions and critically analyze the ongoing public policy debates.
4. Demonstrate the capacity to work effectively in teams and ability to communicate effectively,
orally and in writing.

MBA PROGRAM LEARNING GOALS & OBJECTIVES

1. Leadership and teamwork: Students will be able to assume leadership roles, perform
leadership tasks responsibly, and work effectively in teams.
2. Functional, integrative and strategic abilities: Students will demonstrate
3. understanding of the functional and strategic aspects of business and management, be able to
integrate across functional areas, and develop feasible strategies and action plans.
4. Critical thinking and decision making: Students will be able to identify key problems, collect
and use information critically, and generate viable alternatives and solutions.
5. Global perspective and flexibility: Students will demonstrate understanding of global and
multi-cultural perspectives within the local context and be able to work effectively in multi-
cultural settings.
6. Social, ethical, economic and environmental responsibility: Students will be able to
understand the broader ramifications of their decisions and assess the impact of economic,
ethical, environmental factors on the policies, strategies and operations of the organization.
7. Effective communication: Students will be able to communicate clearly and persuasively in
writing and verbally, in ways appropriate for a variety of objectives and audiences.
8. Entrepreneurialism and innovativeness: Students will be able to create, identify, assess,
shape and act on opportunities in a variety of contexts and organizations.
MBA PROGRAM LEARNING GOALS & OBJECTIVES
9. Managing pressures, complexities and uncertainties: Students will be able to manage
pressures and resource constraints, and think, decide and act in complex and ambiguous
situations.

Indicate below how the course learning objectives specifically relate to any program
learning goals and objectives.

Program Learning Goals and Course Learning Objectives Course Assessment Item
Objectives

Goal 1 – Leadership and 5 Project.

Teamwork

Goal 2 – Functional, integrative 1,2,3,4 Class participation. Quizzes.

and strategic abilities Project. Final exam.

Goal 3 – Critical Thinking – 1,3,4 Project. Class participation.

Decision making capabilities Final exam.

Goal 4 – Global perspective and 1,2,3,4 Project. Quizzes. Class

flexibility participation. Final exam.

Goal 5 – Social, Ethical, 1,3,4 Project. Class participation.

Economical and Environmental
Responsibility

Goal 6 – Communication 5 Class participation. Project

competency presentation.

Goal 7 – Entrepreneurialism 3 Class participation. Project.

and innovativeness

Goal 8 – Managing pressures, 3,4 Class participation. Project.

complexities and Uncertainties

COURSE ASSESSMENT/GRADES
The course is almost entirely case based. It is necessary that students are fully prepared at all times
and contribute meaningfully during class proceedings. Class participation is integral and this is
reflected in its weightage in the grading system.
Quizzes/Individual Assignment.
The project will be team based, to facilitate and promote team work, and will allow the students to
pursue in more detail topics of their choice and interest, within the overall scheme of the course. A
project brief will be required by a certain date to be announced. A Project submission date will also be
announced.
The final exam will test the learning, understanding and critical thinking of the students on the main
topics and broad themes of the course.

1) Class Participation 35%

2) Quizzes/Assignment 15%
3) Project (Group) 15%
4) Final Exam 35%
CLASS-MANAGEMENT POLICY

Please consult MBA handbook for attendance, timelines and norms of professional conduct.

COURSE REQUIREMENTS

There are no prerequisites for the course. However, it is expected that students will show an active
interest in the main themes of the course and will keep abreast of topical developments both
internationally and within Pakistan.

RECOMMENDATION FOR FURTHER EDUCATION

It is highly recommended that students should regularly read up on international and domestic news
and developments in the financial sector. Suggestions: Economist, Financial Times, Bloomberg,
Business Recorder etc

RECOMMENDED TEXTBOOKS/SUPPLEMENTARY READINGS ( if Applicable)

Books: Mishkin and Eakins - Financial Markets and Institutions, 9 th edition.

N.A.

REQUIREMENTS (FOR PCO OFFICE)

Midterm Exam: No If yes please specify the format ( e.g. if
closed book/closed notes or open
book/open notes etc.)

Final Exam: Yes If yes please specify the format ( e.g. if

closed book/closed notes or open
book/open notes etc.)

Double Session: No If yes then which session(s):

Joint Session (combined of two No: If yes then which session(s):

sections):

Simulation: No: If yes, then which session(s):

Type of simulations (Harvard etc.)
must also be mentioned.
Video Recording: No: If yes, then which session(s):

IT Lab sessions No: If yes, then which session(s):

REQUIREMENTS (FOR PCO OFFICE)
Additional session or review session No: If yes, then after which session(s):

Course Cap (applicable for elective Please mention If yes, then what should be the cap?:
courses) if you would
like to cap the
Standard Cap in an Elective Course is course at a
50 number other
than 50:

No:

Any other requirement (e.g. No: If yes, what requirement:

laptop/computer etc.):
And in which session(s):

OTHER REQUIREMENTS
Co-teaching a course: If you are co-teaching this course with any other faculty member, please
mention the session number(s) being taught by him/her and yourself.

N.A.
Session No. Module and Topic: TITLE OF CASE READING MATERIAL LEARNING OBJECTIVES ASSIGNMENT QUESTIONS

Session 1 Financial Institutions The Japanese To gain an appreciation of the

and the Economy Financial System: key role Financial Institutions
From Postwar to the can play in economic
New Millenium development

Session 2 Multilateral The International To understand the role of

Financial Institutions Monetary Fund in multilateral financial
Crisis institutions in a global context

Session 3 The Universal JP Morgan Chase HBS: Note on the Banking To understand the functions,
Banking Model after the Financial Industry structure, role and challenges
Crisis of a large global bank

Session 4 Credit Analysis & Risk Management at HBS: Note on Bank Loans To understand the bank
Risk Management in Wellfleet Bank lending function and various
Banking approaches to credit & risk
management

Session 5 Investment Banking Investment Banking HBS Note: History of To gain an insight into the
in 2008 (A) : Rise and Investment Banking Investment Banking Industry
Fall of the Bear

Investment Banking
in 2008 (B): A Brave
New World

Session 6 Venture Capital Chrysalis Capital: HBS: Note on New To understand the role and
Industry Venture Capital in an Venture Financing significance of the Venture
Emerging Market Capital Industry

Session 7 Real Estate Pakistan’s First To understand the nature and

Investment Trusts Successful Launch of role and significance of the
a REIT Mutual Fund Industry
Session 8 Sovereign Wealth Two Key Decisions To understand the nature and
Funds for China’s Sovereign role of Sovereign Wealth
Fund Funds and their growing
importance.

Session 9 Pension Funds Tough Choices for the To understand the role and
Illinois Pension significance of the Pension
System Fund Industry

Session 10 The Insurance HBS Note on the To understand the role and
Industry Insurance Industry significance of the Life and
non-Life Insurance Industry.
HBS Note:
The US Life Insurance
Industry
Session 11 Micro Finance From Kashf To understand the nature and
Foundation to Kashf role of Micro finance in
Microfinance Bank – general and the evolution of
Changing the industry in Pakistan.
Organizational
Identities.

Session 12 Fintech I Cutting through the To understand the Fintech

Fog: Finding a Future landscape and the challenges
with Fintech to traditional financial
institutions

Session 13 Fintech II TBA

Session 14 Project Presentation