Bank Regulation and Resolution of

Banking Crises
Module Code:
15PFMC097
Credits:
15
Year of study:
Year 1
Taught in:
Term 1
The course has been designed to introduce students to some of the
key concepts, principles and practices in modern banking regulation
and the resolution of modern banking crises. The literature on these
subjects is vast so, in approaching the material, the course will be
selective, focusing on a selection of key issues.
The main topics addressed in the course will be:
Detailed analysis of the elements and objective of bank regulation,
with particular emphasis on the differences between the regulation
of banks and the regulation of non-financial firms; the difficulties
which arise from the complex structure of modern banks; the
evolution of coordinated international rules, including Basel I, Basel
II and Basel III; the relationship between commercial banking and
investment banking, and the rise of shadow banking; bank
supervision, including off-site and forward-looking supervision; the
changing role of the lender of last resort before and after the 2008
crisis, with particular emphasis on the new methods of emergency
liquidity assistance and their implications for the regulation of
banks; issues associated with the insolvency of banks and implicit
regulations; the main approaches to institutional structure for
financial regulation; recent trends in regulatory structure and the
role of Central Banks; the Fully Unified Approach to financial
regulation; offshore financial centres; regulation, international
institutions, standards and codes; proposals for international
regulatory agencies; a World Financial Authority.
Objectives and learning outcomes of the module
On successful completion of this course a student will be able to:
o Understand key objectives of bank regulation
o Describe some of the linkages between regulation and regulatory
practice, on the one hand; and banking crises on the other
o Describe in detail how the 2007 banking crisis originated in the United
States and United Kingdom, how it developed and how it escalated
through the wider financial system
o Understand the main early lessons the crisis has yielded, for
strengthening banking and financial sector regulation
o Explain the importance of bank capital adequacy and its relevance to the
prudential regulation of banks
o List some of the challenges arising from the original Basel I Capital
Accord
o Explain the key elements of the Basel II capital adequacy framework
o Describe the major components of modern bank prudential supervision,
using the financial soundness indicator and CAMELS framework
o Distinguish between lender-of-last-resort support for liquidity and
supporting the bank through investing new capital
o Discuss the concept of ‘too big to fail’ and the difficulties related to it
o Understand the various approaches to resolving failed banks and
managing the consequences of their failure
o Highlight the key principles supporting the establishment of a deposit
insurance system
o Distinguish between the various approaches used by countries, when
structuring their regulatory institutions
o Understand key changes in banking and financial markets, particularly
since the mid-1990s, that have increased the prevalence of systemic risk
o Understand the main arguments for and against the establishment of a
global financial regulator
Workload
Lectures
This module consists of a 1-hour weekly lecture over 10 weeks of
term plus a revision lecture in term 3 as preparation for the final
examination. Students will be supplied with a syllabus with a
breakdown week by week of required and additional reading.
Reading materials are usually accessed electronically from the BLE
and students should come to class prepared.
Tutorials
This module also have a weekly 1-hour tutorial where the questions
posed by the tutor relevant to the lecture are explored and
discussed by the students. Students also prepare and deliver a
short presentation.
Total Work load
Students on this module will have 2 taught hours each
 week. Additionally, adequate personal study time should be
allocated for reading and class preparation.
Method of assessment
Assessment for this module is in three elements:
1. One tutorial presentation at 10%
2. One essay of 2,500 words at 30%
3. One unseen 2-hour written examination at 60%
All elements except the presentation may be resubmitted.
Suggested reading
Core reading:
In addition to the module handouts, you will be asked to study selected chapters in Allen N
Berger, Philip Molyneux and John OS Wilson (2014) The Oxford Handbook of Banking,
Second edition, Oxford UK: Oxford University Press

This is an introductory course on Indian money and banking. It begins with a discussion on the
functions of money, types of money and interest rates. Module 2 discusses the money supply process
in India with definitions of Indian monetary aggregates, money multipliers and sources of high
powered money in India. Module 3 extensively describes Indian money market instruments. Then,
Module 4 follows with a description of the various functions of the Reserve Bank of India including
its traditional and non-traditional monetary policy instruments, and Liquidity Adjustment
mechanisms. Finally, Module 5 concludes with an overview of the Indian banking system, with
particular reference to the commercial and co-operative banks.
COURSE DETAIL
Topics Title Issues No. of lectures
01. What is Money Functions of Money, Kinds of Money, Interest Rates and Return 03
02. Money Supply Traditional Monetary Aggregates, New Monetary Aggregates, 08
Velocity of Money, Monetary Base, Credit Multiplier, Money
Multiplier
03. Money Market Indian Financial Institutions, Call Money, Commercial Paper, 14
Certificate of Deposit, Treasury Bill, Repo, Commercial Bill
04. Reserve Bank of India Traditional and Non-traditional Functions of the RBI, Liquidity 09
Adjustment Facility, Primary Dealers, DFHI
05. Banking Institutions Indian Banking System, Lead Bank Scheme, Action Plan and 06
Service Area Approach, Regional Rural Banks, Assets and
Liabilities of Scheduled Commercial Banks, Co-operative Banks
Total number of lectures 40
Course Description: This degree programme will provide students with advanced
level management and business training relating to practical managerial areas in the
banking and finance area. This involves understanding practical managerial issues
surrounding the running of banking/financial firms including: bank financial and
strategic management, banking and financial sector development, bank and
corporate performance, analysing the main features of financial systems and
markets. It will also develop students’ academic and managerial skills in the
banking/financial services area and become familiar with the latest strategic,
managerial and industrial developments in the financial services industry.
This programme will equip participants’ for career promotion and employment in the
financial sector by developing and enhancing a range of advanced general
transferable intellectual and study skills, as well as enhancing lifelong learning skills
and personal development to contribute to society at large.

Course Structure

January intake: Taught modules are undertaken in the period of January to June and
September to January and will involve the study of 120 credits. The dissertation (or
equivalent - the Financial Research Seminar Series) is valued at 60 credits and is
undertaken during the period of June to September.

September intake: Taught modules are undertaken in the period of September to

June and will involve the study of 120 credits. The dissertation (or equivalent - the
Financial Research Seminar Series) is valued at 60 credits and is undertaken during
the period of June to September.