UNIVERSITY OF GHANA

(All rights reserved)

UNIVERSITY OF GHANA BUSINESS SCHOOL

DEPARTMENT OF FINANCE
2ND SEMESTER, 2022/2023 ACADEMIC YEAR

COURSE SYLLABUS
FINC 406: FINANCIAL MARKETS
Credits: 3 Credit Hours

Teaching Faculty

Elikplimi Komla Agbloyor - EKA

UGBS Graduate Building, Main Campus
ekagbloyor@ug.edu.gh

Emmanuel Joel Aikins Abakah - EJAA

UGBS, Main Campus
ejaabakah@ug.edu.gh

Baah Aye Kusi - BAK

baahkusi@gmail.com

Introduction/Subject Overview or Course Description

This course looks at the importance of financial markets in facilitating the flow of short-
term and long-term funds. It provides students with the theoretical framework for under-
standing financial markets, financial institutions and financial instruments. The course fo-
cuses on financial intermediation, depository institutions and non-depository institutions,
money markets, stock markets, bond markets, foreign exchange markets, derivatives mar-
kets, and international financial markets and what the implications of the developments of
these markets have for businesses, individuals, and policy makers. It covers financial in-
novations and regulatory issues in both the domestic and international financial markets.
The course also looks at interest rate theory, and the role of monetary and fiscal policy in
providing background for explaining current developments in the financial markets.

1
Course Objective/Goals
The objective is to prepare students to take on roles in the financial market in order to
positively influence policies relating to these markets. Students will have an appreciation
of the broader context of the money and capital markets; understand the dynamics of trad-
ing securities in these markets and why they sometimes fail to meet the financial needs of
investors; gain insights into the challenges confronting the development of the financial
market, and therefore equip themselves with the framework to objectively examine and
address these issues.

Learning Outcomes
Upon successful completion of this course, students would be able to:
• Gain insights into the relevance of the economics of financial intermediation and
innovation
• Evaluate securities that are traded on the money and capital markets
• Appreciate the dynamics of interest rates in financial markets
• Appreciate the dynamics of the bond and equity markets and their relevance to the
economy
• Understand the operations of the mortgage market and its relevance to the economy
• Appreciate the dynamics of the foreign exchange and derivative markets

Course Delivery
The methods to be employed in this course will include: lectures, discussions and group
work.

Plagiarism Policy
Plagiarism is defined as using and passing off as one’s own idea or product work of another
without expressly giving credit to another.

Borrowing someone else’s answers, unauthorized possession of tests or answers to tests,

or possession of material designed in answering exam questions, are also subject to
university policy regarding instructional offenses.

The photocopying of substantial portions of a textbook (without the publisher's permission

is another misuse of intellectual property, and is also a violation of copyright law).

Assessment and Grading

Students’ will be evaluated through: case analysis, class participation, class assignments,
and examination.

Class Participation/Attendance 25%

Interim Assessment 25%
Final Exam 50%
Total Score 100%
Grading Scale
Refer to Student Handbook.

2
Reading List /Required Text
Abor, Joshua Y. (2020). Financial Markets and Institutions: A Frontier Market Perspec-
tive, Digibooks.

Madura, J. (2020). Financial Markets and Institutions, (13th Edition), Cengage Learning.

Fabozzi, F.J., Modigliani, F. & Jones, F.J. (2013). Foundations of Financial Markets and
Institutions. (4th Edition), Pearson.

Mishkin, F.S., & Eakins, S.G. (2018). Financial Markets and Institutions, (9th Edition),
Pearson.

Cecchetti, S.G. and Schoenholtz, K.L. (2020). Money, Banking, and Financial Markets,
(6th Edition), McGraw-Hill.

Sam, M. (2010). Securities Markets and Investments: A Ghanaian Primer, Smartline.

Ghana Fixed Income Market Manual

Ghana Stock Exchange (GSE) 25th Anniversary Lecture

Prospectus for Edendale Bond Issue

Greenwood, R., & Scharfstein, D. S. (2012). How to Make Finance Work (Digest Sum-
mary). Harvard Business Review, 90(3), 104-110.

Merton, R. (2009). Making the Financial Markets Safe. Harvard Business Review.

Campbell, J. Y., Jackson, H. E., Madrian, B. C., & Tufano, P. (2011). Making Financial
Markets Work for Consumers (Digest Summary). Harvard Business Review, 89(7/8), 47-
54.

Other Information
You are expected to:
• Attend all lectures. The topics that will be covered in this course are cumulative;
therefore, missing even one lecture could adversely affect your understanding of
subsequent materials. Attendance of students will be taken at each lecture.
• Read the relevant chapters of the recommended texts before attending lectures.
• Attempt all the practice questions that will be assigned to you.
• Submit all assignments on the due dates. Late assignments will be penalized.
• Get familiar with emerging and latest developments in finance from e.g., The Daily
Graphic, Business and Financial Times, The Wall Street Journal and the London
Financial Times, Google Finance, CNN Finance, The Financial Times, and The
Economist.

3
 • Participate actively in class.
• Mute or put off your mobile phones in class.

Course Delivery plan/Schedule

The module will be covered in a 13-week period.

Course Delivery plan/Schedule

W Topic Sub-Topics Comments Comments
e -1
e
k
1 Introduction • Overview of financial Abor; Ma-
to Financial system dura;
Markets & In- • Financial instruments Fabozzi
stitutions • Financial markets
• Financial markets and
regulation
2 The Econom- • Role of financial interme- Abor;
ics of Finan- diaries Fabozzi
cial Interme- • Financial innovation
diation and • Asset securitization
Innovations
3 The Money • Money market securities Abor; Ma-
Markets • Participants in the money dura;
market Fabozzi
• Valuation of money mar-
ket securities
4 Depository • Depository institutions Abor;
Institutions and Asset/liability prob- Fabozzi
lem
• Banks and bank regula-
tion
• Saving and Loans Associ-
ations and bank crises
• Savings banks and credit
unions
• Central bank and money
creation

4
5 Non-deposi- • Role of non-depository fi- Abor; Ma-
tory institu- nancial institutions dura;
tions • Insurance companies Fabozzi
• Investment companies
• Pension funds
6 The Bond • Types of bonds Abor; Ma- Ghana
Markets • Bond valuation dura; Fixed In-
• Bond market develop- Fabozzi come Mar-
ment ket Manual

Prospectus
for Eden-
dale Bond
Issue
7 The Mort- • Types of mortgages Abor; Ma-
gage Markets • Mortgage financing dura;
• Valuation of mortgages Fabozzi

8 The Equity • Private and public equity Abor; Ma- GSE 25th
Markets markets dura; Anniver-
• Stock secondary markets Fabozzi sary Lec-
• Investor monitoring and ture
market for corporate con-
trol
9 Determina- • Theories of interest rates Abor; Ma-
tion and Term • Estimating security yields dura; Guest
Structure of • The term structure of in- Lecture
Interest Rates terest rates
1 Derivative • Types of derivatives Abor; Ma-
0 Markets • Economic importance of dura;
derivatives market Fabozzi

1 Foreign Ex- • Foreign rates in the long- Abor;

1 change Mar- run and short-run Fabozzi
kets • Foreign exchange transac-
tions
• Government policy and
foreign exchange interven-
tion
• Exchange rate regimes

5
Class Presentations

Grou Work Reference

p
1 King and Levine
2 Adjasi and Biekpe
3 Tesah Capital Article
4 G. A. Akerlof
5 Stiglitz
6 McKinnon and Shaw
7 Agbloyor, Abor, Adjasi and Yawson
8 Machine Learning and Risk
9 Artificial Intelligence and Machine
learning
10 Financial Crimes in times of COVID-
19
11 Agency Conflict and Bank Interest
Spread
King, R. G., & Levine, R. (1993). Fi-
nance and growth: Schumpeter might
be right. The quarterly journal of eco-
nomics, 108(3), 717-737
Adjasi, C. K., & Biekpe, N. B.
(2006). Stock market development
and economic growth: The case of se-
lected African countries. African De-
velopment Review, 18(1), 144-161.
https://tesahcapi-
tal.com/2021/01/need-for-securitiza-
tion-of-loans-sitting-on-the-balance-
sheets-of-banks-in-ghana/
Akerlof, G. A. (1970). The market
for" lemons": Quality uncertainty and
the market mechanism. The quarterly
journal of economics, 488-500.
Stiglitz, J. E. (1993). The role of the
state in financial markets. The World
Bank Economic Review, 7(suppl 1),
19-52
McKinnon and Shaw (1973) hypothe-
sis on financial repression.
Agbloyor, E. K., Abor, J. Y., Adjasi,
C. K. D., & Yawson, A. (2014). Pri-
vate capital flows and economic
growth in Africa: The role of domes-
tic financial markets. Journal of Inter-
national Financial Markets, Institu-
tions and Money, 30, 137-152
https://www.iif.com/por-
tals/0/Files/pri-
vate/32370132_van_liebergen_-_ma-
chine_learning_in_compli-
ance_risk_management.pdf
https://www.fsb.org/wp-content/up-
loads/P011117.pdf
https://www.bis.org/fsi/fsibriefs7.pdf
Mensah, S., & Abor, J. Y. (2014).
Agency conflict and bank interest

6
 spreads in Ghana. African Develop-
ment Review, 26(4), 549-560
12 Banks, Minimum Capital Require-
ment, Risk exposure of banks, reserve
requirements of banks and what banks
do in general
13 Insurance companies, Minimum Capi-
tal Requirement, Risk exposure of in-
surance firms, reserve requirements of
insurance firms and what insurance
companies do in general
14 Investment companies, Minimum
Capital Requirement, Risk exposure
of Investment companies, reserve re-
quirements of Investment firms and
what Investment firms do in general
15 Savings and Loans Companies, Mini-
mum Capital Requirement, Risk ex-
posure of S&Ls, reserve requirements
of S&Ls and what S&Ls do in general
16 Pension funds, Minimum Capital Re-
quirement, Risk exposure of Pension
funds, reserve requirements of Pen-
sion funds and what Pension funds do
in general
17 Cryptocurrencies. What they are and
the risks involved with them
18 Ghana Fixed Income Market. Re-
search on what they do, Instruments
traded on the Ghana fixed income
market among others
19 Ghana Alternative Exchange (GAX).
Research on what the GAX is about,
the minimum requirements as well as
other thing regarding the listing of
firms on the GAX