NATIONAL UNIVERSITY OF MODERN LANGUAGES Faculty of Management Sciences COURSE OUTLINE BBA-Semester-V Course Title: Money & Banking

Course Code: Credit Hours: 3+0

Course Instructor: Fareeha Riaz/Waris Ali Prerequisites: The prerequisites for this course are Economics and Introduction To Finance. Textbooks :Modern Money And Banking by Roger LeRoy Miller, David D. VanHoose . McGraw Hills Publications. Course Description This course addresses classical and contemporary issues in the theory of money, banking, and financial institutions. Topics covered include: the gold standard, the structure of central banks, theories of money demand and money supply, the relationship between money supply and overall economic activity, the theoretical and practical aspects of monetary policies and money creation, the efficacy of fiscal policies versus monetary policies, and the role the central banking plays in economic stabilization. Reference Material Money, banking and financial markets by Stephen G.Cecchetti & Lecture notes. Course Objectives: Aim in this course will be two fold. First, to develop a basic understanding of the financial system: how it operates and why it plays a central role in the economy. Second, to analyze in detail the aims, conduct, influence and limitations of monetary policy. Course Outcomes: An objective is to gain skill and practice in the analysis of economic situations, events, and policies, particularly those directly involving money, banking, and finance.At the end of the course, the student will be able to: 1. Define the concept of the money supply; Distinguish between different types of financial institutions; Locate sources of measuring macroeconomic performance 2. Identify the functions of the Central bank.

3. Determine the equilibrium interest rate from a given set of market conditions; Distinguish between real and nominal interest rate. Assessment Instrument with Weights Midterm 30% End term 50% Internal evaluation 20% (3quizez, 1 assignment or research base term paper). Week # Lecture # 1. 2. TOPICS TO BE COVERED Introduction to money and the financial system. parts of the financial system The five core principles of money and banking Nature & Functions of Money. Meaning of money. Barter system and the difficulties Of barter. Monetary standards

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Exchange & transaction costs. Commodity money &commodity standards Monopoly model of money. Seigniorage Approaches to defining& approaching money. Transaction approach. Monetary approach Monetary base. The future of money. Financial instruments, financial markets & financial institutions. Direct& indirect financing. Uses of Financial instruments. Underlying verses Derivative instruments. Bank and the different types of bank. Functions of a commercial bank Credit and the Credit creation process in banking. Central banking. Importance of central bank. Functions of central bank The thrift industry. Monetary policy and the Instruments of monetary policy. Effects & machines of OMO. Discount window policy Reserve requirements. MID TERM EXAMS MID TERM BREAK

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Interest rates. Interest rates. Money in traditional macroeconomic system. Money demand function. Supply of money. Derivation of IS schedule Derivation of IS-LM schedule IS-LM Equilibrium and its effects on economy. Monetary policy in IS-LM model. Objectives & targets of monetary policy. Intermediate targets of monetary policy. Nominal interest rate as intermediate target. Money stock as intermediate target Nominal income as intermediate target. REVISION END TERM EXAMS

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