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Fiancial Instutions

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DFI 503 FINANCIAL INSTITUTIONS AND MARKETS

COURSE FACILI TATION MATERIAL

COMPILED BY

ANGELA M. KITHINJI
UNIVERSITY OF NAIROBI

UNIVERSITY OF NAIROBI
SCHOOL OF BUSINESS

DFI 503: FINANCIAL INSTITUTIONS & MARKETS
COURSE OUTLINE
COURSE FACILITATOR MRS KITHINJI

[Financial Markets, Financial Institutions, the Power of Information, and Financial Policies]

WEEK

1. An Overview of Financial Institutions and Markets

• The Financial System of an Economy • The Structure of a Financial System • The Stock Market

2. Emerging Markets, African Markets and Capital Market Development

• Financial Markets and the Organized Exchange • Characteristics of Emerging Capital Markets • Indicators of Capital Market Development

3. Financial Regulation, Intermediation, Capital Market Structures and Development

• The Players in a Typical Capital Market:

- Capital Market Intermediaries - The Regulator: The Capital Market Authority - The Stock Exchange [NSE] - Investors - Government

• The Institutional, Regulatory and Legal Framework in Financial Markets

- Types of Regulations in Financial Markets - Market Based Banking Regulations - Crisis in Banking Regulation.

4. Securities and Their Characteristics

• Shares, Fixed Income Securities, Derivatives • Challenges of Trading of securities in the Stock Market • Why Derivatives Trading is Absent in Most Emerging Markets

5. Financial Contracting Under Imperfect Information

• Sources of Financial Information • The Principal-Agent Problem(Jensen & Meckling, Hairs & Raviv, Townsend’s CSV Model) • Asymmetric information and Financial Market Failure • Moral Hazard in Financial Markets • Financial Market Failure • Credit Rationing in Financial Markets • Adverse Selection: Screening…...

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