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
[email protected]

Emmanuel Joel Aikins Abakah - EJAA

UGBS, Main Campus
[email protected]

Baah Aye Kusi - BAK

[email protected]

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
understanding financial markets, financial institutions and financial instruments. The
course focuses on financial intermediation, depository institutions and non-depository
institutions, money markets, stock markets, bond markets, foreign exchange markets,
derivatives markets, and international financial markets and what the implications of the
developments of these markets have for businesses, individuals, and policy makers. It
covers financial innovations 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
trading 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%

2
Grading Scale
Refer to Student Handbook.

Reading List /Required Text

Abor, Joshua Y. (2020). Financial Markets and Institutions: A Frontier Market
Perspective, 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.

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 • 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.
• 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;
to Financial system Madura;
Markets & • Financial instruments Fabozzi
Institutions • Financial markets
• Financial markets and
regulation
2 The • Role of financial Abor;
Economics of intermediaries Fabozzi
Financial • Financial innovation
Intermediatio • Asset securitization
n and
Innovations
3 The Money • Money market securities Abor;
Markets • Participants in the money Madura;
market Fabozzi
• Valuation of money
market securities
4 Depository • Depository institutions Abor;
Institutions and Asset/liability Fabozzi
problem
• Banks and bank regulation
• Saving and Loans
Associations and bank
crises
• Savings banks and credit
unions

4
 • Central bank and money
creation
5 Non- • Role of non-depository Abor;
depository financial institutions Madura;
institutions • Insurance companies Fabozzi
• Investment companies
• Pension funds
6 The Bond • Types of bonds Abor; Ghana
Markets • Bond valuation Madura; Fixed
• Bond market development Fabozzi Income
Market
Manual

Prospectus
for
Edendale
Bond Issue
7 The • Types of mortgages Abor;
Mortgage • Mortgage financing Madura;
Markets • Valuation of mortgages Fabozzi
8 The Equity • Private and public equity Abor; GSE 25th
Markets markets Madura; Anniversar
• Stock secondary markets Fabozzi y Lecture
• Investor monitoring and
market for corporate
control
9 Determinatio • Theories of interest rates Abor;
n and Term • Estimating security yields Madura;
Structure of • The term structure of Guest
Interest Rates interest rates Lecture
1 Derivative • Types of derivatives Abor;
0 Markets • Economic importance of Madura;
derivatives market Fabozzi
1 Foreign • Foreign rates in the long- Abor;
1 Exchange run and short-run Fabozzi
Markets • Foreign exchange
transactions
• Government policy and
foreign exchange
intervention
• Exchange rate regimes

5
Class Presentations

Group Work Reference

1 King and Levine King, R. G., & Levine, R. (1993). Fi-
nance and growth: Schumpeter might
be right. The quarterly journal of eco-
nomics, 108(3), 717-737
2 Adjasi and Biekpe Adjasi, C. K., & Biekpe, N. B. (2006).
Stock market development and eco-
nomic growth: The case of selected
African countries. African Development
Review, 18(1), 144-161.
3 Tesah Capital Article https://tesahcapital.com/2021/01/need-
for-securitization-of-loans-sitting-on-
the-balance-sheets-of-banks-in-ghana/
4 G. A. Akerlof Akerlof, G. A. (1970). The market for"
lemons": Quality uncertainty and the
market mechanism. The quarterly jour-
nal of economics, 488-500.
5 Stiglitz Stiglitz, J. E. (1993). The role of the
state in financial markets. The World
Bank Economic Review, 7(suppl 1), 19-
52
6 McKinnon and Shaw McKinnon and Shaw (1973) hypothesis
on financial repression.
7 Agbloyor, Abor, Adjasi and Yawson Agbloyor, E. K., Abor, J. Y., Adjasi, C.
K. D., & Yawson, A. (2014). Private
capital flows and economic growth in
Africa: The role of domestic financial
markets. Journal of International Finan-
cial Markets, Institutions and
Money, 30, 137-152
8 Machine Learning and Risk https://www.iif.com/portals/0/Files/
private/32370132_van_liebergen_-
_machine_learning_in_compliance_risk
_management.pdf
9 Artificial Intelligence and Machine https://www.fsb.org/wp-content/
learning uploads/P011117.pdf
10 Financial Crimes in times of COVID-19 https://www.bis.org/fsi/fsibriefs7.pdf
11 Agency Conflict and Bank Interest Mensah, S., & Abor, J. Y. (2014).
Spread Agency conflict and bank interest
spreads in Ghana. African Development
Review, 26(4), 549-560

6
12 Banks, Minimum Capital Requirement,
Risk exposure of banks, reserve require-
ments of banks and what banks do in
general
13 Insurance companies, Minimum Capital
Requirement, Risk exposure of insur-
ance firms, reserve requirements of in-
surance firms and what insurance com-
panies do in general
14 Investment companies, Minimum Capi-
tal Requirement, Risk exposure of In-
vestment companies, reserve require-
ments of Investment firms and what In-
vestment firms do in general
15 Savings and Loans Companies, Mini-
mum Capital Requirement, Risk expo-
sure 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 Pension
funds and what Pension funds do in gen-
eral
17 Cryptocurrencies. What they are and the
risks involved with them
18 Ghana Fixed Income Market. Research
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