THE ECONOMICS OF

MONEY, BANKING AND

FINANCIAL MARKET
 Course length: 3 credits
 Course structure: 15 contents
 Study method: Combining Listening lectures, Discussion
and Exercises
 Assessment: combined Attendence, Discussion, Mid-term
test and Final exam
 Lecturer
MSc. Nguyen Khanh Tin
• Department of Banking, Faculty of Finance - Banking,
University of Economics and Business, VNU
• Email: tinnk@vnu.edu.vn
Required Materials

 Kinh tế học Tiền tệ - Ngân hàng textbook,

Trịnh Thị Hoa Mai (Chief editor).
 The economics of Money, Banking and
Financial Market, Fredric. S. Mishkin.
 The economics, David Begg, Stanley
Fischer, Rudiger Dornbusch.
 Specific topics
1. Overview of the Money and 8. Banks and Money Supply
Financial system
9/10. Central banks and Monetary
2. Interest rates policy (C15.358)
3. The theory of asset demand 11. Review exercises and take
midterm exams
4. The Behavior of Interest rates
12. The Foreign exchange
5. An Economic Analysis of
Financial Structure 13. Central banks and the Foreign
exchange
6. Banking and the Management
of Financial Institutions 14/15. Monetary theory
7. Multiple deposit, the Money 16. Course summary
Supply Process and Determinants
of the Money Supply
 Chapter I:
Overview of the Money and
Financial system
 Main contents

1. An overview of the Financial system

2. What is Money?
 The content should be understood
after the lesson:
 Financial system: Financial markets and
Financial intermediaries (Including:
Characteristics; Structure; and Function)
 What is money?
1. An overview of the Financial system

The Financial
system

Financial Financial
markets intermediaries

Bond Stock Insurance Pension

Banks
markets markets companies funds
1. An overview of the Financial system
1.1 Financial market
a. Characteristics of financial markets
b. Structure of Financial markets
c. Financial market instruments
a. Characteristics of financial markets
 Direct
 High cost
 High risk
 Asymmetric selection
 Moral hazard
b. Structure of Financial markets

The
Instrument The liquidity maturity of The
properties of market the locations
securities
• Debt and • Primary • Money and • Exchanges
equity and Capital and OTC
markets secondary markets market
markets (Only for
secondary
market)
 c. Financial market instruments

Money market Capital market

instruments instruments

• Treasury bills • Stock

• A certificate of deposit • Mortgages
(CD) • Corporate bonds
• Commercial paper • Government securities
• Banker’s acceptances • Municipal bond
• Repurchase Agreements • Bank commercial loans
(Repos)
1.2 Financial intermediaries

a. Characteristics of financial markets

b. The role of financial intermediaries
c. The main financial intermediaries
a. Characteristics of financial intermediaries

 Low transaction cost

 Risk sharing
 Low adverse selection
 Low moral hazard
b. The role of financial intermediaries
 The most important and essential capital
channel of the economy
 Funding channel mainly for small and
medium enterprises
 Low-cost and safe financing channel for
businesses
 A safe investment method
c. The main financial intermediaries
 2. What is money?

Money as anything that is generally accepted in

payment for goods or services or in the repayment
of debts.
Distinguish among:

Money Wealth

Currency Income
2.1 Functions of Money
 Medium of exchange: it is used to pay for
goods and services
 Unit of account: The second role of money is
to provide a unit of account; that is, it is used
to measure value in the economy.
 Store of value: it is a repository of
purchasing power overtime. A store of value
is used to save purchasing power from the
time income is received until the time it is
spent.
2.2 Evolution of the payments system
 Commodity money
 Fiat money
 Checks
 Electronic payment
 E-Money
 2.3 Measuring money

M2
• M2 + Large-
• Currency + Traveler’s denomination time
checks • M1 + Small-
denomination time deposits + Money
+ Demand deposits market mutual fund
+ Other checkable deposits + overnight
repurchase agreements shares (institutional)
deposits + Repurchase
+ Savings deposits and
money market deposit agreements +
accounts + Money Eurodollars
market mutual fund
M1 shares (noninstitutional)
M3
Thank you for your attention!
MSc. Nguyen Khanh Tin
Email: tinnk@vnu.edu.vn