مبادئ الصيرفة والتمويل / Principles of banking and finance

This subject guide provides an introduction to the principles of banking and finance.

It covers a broad range of topics using an economic perspective and aims to give a general background to any student interested in the subject of banking and finance.

The contents of the subject guide can be broken down into three main parts:

• In Part I, we investigate the structure and functions of financial systems. We focus on each of the three main entities that compose a financial system: financial intermediaries, securities, and financial markets.

We then investigate the difference in the relative importance of financial intermediaries and financial markets around the world and thus propose a historical and economic investigation of the reasons behind the emergence of bank-based systems and market-based systems in different countries. 

• In Part II, we examine the issues that come under the broad heading of principles of banking. Here we examine the key economic reasons used to justify the existence of financial intermediaries (and specifically banks).

We then investigate the special nature of banking regulation. Finally, we outline the key risks in banking and the main methods used for risk management.

Thus, the areas covered include the role of financial intermediation, banking regulation, and banking risk management. 

• In Part III, we move to the issues known as principles of finance.

Here we will examine the techniques used by firms to value real investment projects, and the models used by investors to value bonds and stocks.

We then investigate the issues related to the formation of an optimal portfolio by investors, and we derive the main equilibrium asset, pricing models.

Finally, we investigate the efficiency of the market in pricing securities, and thus we propose a theoretical and empirical validation of the efficient market hypothesis.

The areas covered in this section, therefore, include capital budgeting, securities valuation, mean-standard deviation portfolio theory, asset pricing models, and informational market efficiency.

24 Principles of banking and finance is a compulsory course for the BSc Banking and Finance. This is an important subject because it establishes many of the fundamental concepts in banking and finance that will be developed in later subjects in the degree, such as 92 Corporate finance, 29 Financial intermediation, and 143 Valuation and securities analysis.