Assignment Brief

Module Code and Title: FIN402 Exploring Fundamentals of Financial Markets

Assignment Number & Title: Ass1. Group Assignment Project

Assessment Type: Group Task Based Coursework with Presentation

Weighting of assessment (%TMM) :50%

Assessment Learning Outcomes

Upon successful completion of this assessment the students will be able to:

A) Knowledge and understanding

Upon successful completion of this module the students will be able to:

A4 Demonstrate a broad understanding of the knowledge base of the finance pathway

specialisation and its terminology; appreciate that areas of this knowledge base are open to
ongoing debate and reformulation.
A6 Collect and judge information from a variety of authoritative sources, using pre-defined
theoretical frameworks, tools and concepts to inform a choice of solutions to problems.

B) Skills
Upon successful completion of this module the students will be able to:

B4 Work collaboratively and effectively with others and recognises the factors that affect team
performance. Demonstrate self-awareness, values and self-leadership through planning and
reflection.
B5 Identify a well-defined focus for enquiry; plans and undertakes investigative strategies
using a defined range of methods; collect data from a variety of sources, and communicates
results effectively in an appropriate format; use interpersonal and communication skills to
clarify tasks, identify and rectify issues in a range of contexts.

Module Leader: Dr Elias Boukrami

Submission Details

Submission Deadline: Week 10, by 23:59 pm via Blackboard

Release of Feedback: 10/04/2022

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Completing Your Assignment
What am I required to do in this assignment?

The first assessment consist of 15-20 minutes presenation to be uploaded and 2000
words report to be submitted in week 10. There are 9 different topics, shown in the list
below. Each topic will have a specific assignment question sheet.

You are required to present their you from week 3 till week 11. This means that there will be 9 rounds of
presentations throughout the semester covering different topics, each topic will consist of specific market
instrument or security. Besides, each group on the day of the presentation will submit a written draft of max
500 words which includes an introduction of their topic and some key points for future research and policy
implications. Then you will be asked to deliver a written report of no more that 2,000 words, excluding the
Appendix and the Bibliography as the final written report which is part of the assessment strategy. Please
provide and present the data gathered, figures or whatever you think that will help you in building up your
arguments. It is essential to incorporate in your analysis, financial and indicators, (use datastream, Financial
Times, Wall Street Journal, reports, Eurostat, Thomson-Reuters, the relevant literature (try to link with the
current developments in current specialist press). The submission will take place in the end of week 9. Please
follow up BB announcements and the module’s handbook.

You will submit a formative presentation of your early results and findings and together with the
insights gained from the class (on line) presentation an essay for this assessment will be submitted
via BB

For further details see in the end of the document.

Is there a size limit? 2,500 words plus or minus 10%.

What do I need to do to pass?

The essay paper and presentation will be worth 50% of the total mark.

You should show clear evidence of deep understanting, analytical skills, use of data and engagement
throughout the semester. The use also of cited relevant papers, professional or academic studies
and critical analysis of the current environment are vital ingedients for a successful completion.

How do I produce high quality work that merits a 70% or above grade?

You should follow closely the below mentioned requirements:

Written essay mark (50%) will be assessed on the quality of your work with regard to: Justification
of topic, Content (structure, application of theory, relevance, data usage), Critical literature/theory
review, Methodology, Choice of data set, Computations, Analysis, Conclusions. For example, credit
will be given to an integrative critical understanding, command of techniques, ability to formulate and
test concepts and hypotheses, and a critical analytical approach, as well as presentation and
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referencing. The written assignment will require you to plan and prioritize your time. Further details
are provided in the end of this document regarding the marking criteria of the written report. Each
student will receive an individual mark for the group work.

70%+ means: Overall excellent report, all aspects of brief addressed in full, insightful analysis and
reflection throughout. Logical and insightful recommendations included which logically follow from
the main body of the report.

How does assignment relate to what we are doing in the scheduled sessions?

The group CW is closely related to the issue of demand and supply of money and the role of the
banking system within this context. It is of great importance to formalize the actual policies and
decisions made by banking institution relarding their policy effects to the rela economy. Hence, the
projects follows 100% the learning outcomes and the teaching material.

How will I receive formative feedback for this assignment?

Formative feedback is provided to all groups. Students must upload their presentation on the
designated padlet and once it is released students will start getting the feedback. A common
feedback form will be released so as students to follow a certain way in their comments making the
activity even more helpful for presenters. The tutor will act in the end as a referee elaborating on the
students’ feedback. The tutor will give emphasis on the strengths and weaknesses of the
presentation and will provide detailed guidance on how the work should be improved. Hence, the
process gains a collaborative sense engaging all students in the CW journey.

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Presentation feedback form (student)
Name of Presenter
Title of Presentation
Date of Presentation

Criterion (scale 1-5)*

Content and coverage of the topic:
• How well does the presentation cover the
topic? For example, are relevant issues
introduced and is reference made to relevant
research in the field?

• How well does the presentation provide

relevant data and examples and how well
are these explained?

• How far does the presentation show

evidence of independent/extended study
(for example, evidence of research beyond
the reading list and the use of the presenter’s
own examples)?

• How much did you learn from the

presentation?

 Does the presentation follow the marking

criteria of the assignment?

Delivery:
• How would you assess the structure and
coherence of the presentation?

• how would you assess the presenter’s use

of illustrative materials, e.g. Powerpoint,
overheads or handouts showing graphs,
pictures, examples or other appropriate
supporting data?

• how would you assess the presenter’s

ability to make the topic accessible to the
audience?

How would you overall rate the presentation and how this can be improved?
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
………………………………………….

* SCALE: 1 = very good, 2 = good, 3 = satisfactory, 4 = less than satisfactory, 5 = weak

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Regent’s University Generic Descriptors

Conversion Conversion
Band scale for UG scale for PG Generic descriptors
Programmes Programmes
All learning outcomes and task specifications have been achieved to an exceptionally
high standard (according to the level of study).

The outcome of the assessment task is presentable in a professional context and may
extend practical or theoretical knowledge in the field. It displays an exceptionally high
8 90 - 100 90 - 100 level of understanding, evaluation, insight, analysis, reflection and/or criticality (according
to the level of study), and connections are developed both within and beyond the task
set.

The work’s organisation, structure and presentation are developed to an exceptionally

high standard.
All learning outcomes and task specifications have been achieved to an outstanding
standard (according to the level of study).

The outcome of the assessment demonstrates an outstanding display of understanding,

7 80 - 89 80 - 89 exploration, evaluation, insight, analysis, reflection, criticality and/or research (according
to the level of study). Connections are developed both within and beyond the task set.

The work’s organisation, structure and presentation are developed to an outstanding

standard.

All learning outcomes and task specifications have been achieved to high standard
(according to the level of study).

The outcome of the assessment demonstrates an excellent display of understanding,

6 70 - 79 70 - 79 exploration, evaluation, insight analysis, reflection, criticality and/or research (according
to the level of study), and connections are developed both within and beyond the task set.

The work’s organisation, structure and presentation may be developed to an excellent

standard.

All learning outcomes have been achieved at a good and some to a very good standard
(according to the level of study).

The outcome of the assessment demonstrates a very good level of understanding,

exploration, evaluation, analysis, reflection, criticality, some insight and/or very good
5 60 - 69 60 - 69 research (according to the level of study), and connections are established within the task
set, and in some cases reaching beyond.

The work’s organisation, structure and presentation may be developed to a very good
standard.
Most learning outcomes have been met at a good standard (according to the level of
study).

The outcome of the assessment demonstrates a good understanding, exploration,

4 50 - 59 55 - 59 evaluation, analysis, and some reflection, criticality and/or appropriate research.
(According to the level of study)

The work’s organisation, structure and presentation may be appropriately developed.

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 All learning outcomes have been met to a minimum satisfactory standard (according to
the level of study).

The outcome of the assessment shows an adequate understanding, of major ideas, with
little insight and basic research. Limited level of analysis, reflection and/or criticality
(according to the level of study).
3 40 - 49 50 - 54
The outcome of the task shows ability to paraphrase concepts and theories, with limited
ability to make connections.

The work may be disorganised, and the structure and presentation may be barely
adequate.
Most learning outcomes have almost been met, whilst the rest have not (according to the
level of study).

The outcome of the assessment shows a limited understanding of major ideas, with little
2 30 - 39 36 - 49 insight, very basic research, and very limited ability to make connections. No analysis,
reflection and/or criticality (according to the level of study)

The work may be disorganised, and the structure and presentation may be barely
adequate.
The majority of the learning outcomes have not been met (according to the Level). The
outcome of the assessment task is incomplete, flawed, very limited and/or presents
significant inaccuracies.

1 11 – 29 21 – 35 The outcome of the assessment shows very limited understanding with no insight, and
very limited ability to make connections within basic ideas in the field, very fragmented.
Lacks research. No analysis, reflection or criticality (according to the level of study)

The work is disorganised, and unstructured. Presentation is barely adequate.

None of the learning outcomes have been met. The task has not been addressed by the
student, or there is no assessable task.

The outcome of the assessment shows no understanding of basic ideas, with no insight
and shows no ability to make connections within basic ideas in the field, or the
0 0 - 10 0 - 20
connections are completely irrelevant. Lacks research. No understanding, analysis,
reflection nor criticality.

The work completely lacks organisation and structure. Presentation is completely

inadequate.

Summative Assessment 1 (Group Report)

The supply side: A bit of theory

It is well recognised that the effects of financial crisis has affected the economy for a long period after the
initial phase of the crisis in 2008. Such legacy effects can be thought of as headwinds that shape the
subsequent recovery by acting to constrain the rate of growth, as many of the underlying causes of the
financial crisis are gradually unwound. A number of such headwinds that continue to influence the pace of
recovery is for instance the constrained credit conditions, the debt restructuring, the fiscal consolidation,
and weaker global growth.

This case study focuses on the evolution of just one of those headwinds – that of credit conditions to
business. This is an area in which we have seen some dramatic swings in recent years. At the height of the
financial crisis, bank lending conditions tightened sharply, and improved only slowly in the subsequent years,
raising questions about the extent to which this would constrain corporate investment. More recently,
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however, conditions have improved further, both for larger companies and, over the past year or so, for
SMEs, but unfortunately not for all the European countries.

Credit conditions for business are a function both of the cost of credit – the price of the loan – and of the
availability of such credit – the banks’ willingness to lend, coupled with the underlying terms on which the
credit is offered. The cost of business credit from banks is determined by two factors – the cost of wholesale
funding for the lender, combined with the loan margin for the loan itself, determined by the bank’s risk
appetite, credit risk conditions and the bank’s willingness to lend. Both have seen sharp swings over the past
eight years. In terms of lending flows, the financial crisis was followed by a collapse of bank lending, as banks
undertook the painful task of rebuilding their balance sheets, drastically cutting new lending and increasing
loss-absorbing capital.

Taking a further step moving beyond the bank-related supply-side factors that explain loan dynamics cannot
actually provide a full picture of the tightness of credit conditions. Data on aggregate lending generally
reflect movements in both demand and supply for loans, allowing only a limited number of factors. Hence,
this should be of great interest to draw on additional sources of information, such as bank lending surveys.

The bank lending survey is addressed to senior loan officers of a representative sample of euro area banks.
Its main purpose is to enhance the understanding of bank lending behaviour in the euro area. The questions
distinguish between three categories of loan: loans or credit lines to enterprises; loans to households for
house purchase; and consumer credit and other lending to households. For all three categories, questions
are asked on credit standards for approving loans; credit terms and conditions; and credit demand and the
factors affecting it. The survey questions are phrased in terms of changes over the past three months or
expectations of changes over the next three months. The aim of the Survey is to gain an insight into the
developments of commercial banks' credit standards and credit conditions and terms as well as changes in
credit demand.

The demand side: A bit of theory

The monetary transmission mechanism in the euro area has been adversely affected by the recent financial
and sovereign debt crises. This can be inferred from the limited transmission of changes in the monetary
policy stance to the real economy via bank lending rates and persistently restrained credit to the non-
financial private sector, especially in countries under financial stress. The limited transmission of changes in
the monetary policy rate to lending rates and the supply of credit might stem from the inability and/or the
unwillingness of banks to grant credit. These might reflect weaknesses in banks’ and/or borrowers’ balance
sheets through the so-called “bank-lending” and “non-financial borrower balance sheet” channels,
respectively.

In order to perform any analysis you need to use the Survey on the Access to Finance of SMEs in the Euro
Area (SAFE). The survey is conducted jointly by the European Central Bank (ECB) and the European
Commission (EC). First undertaken in 2009 and conducted bi-annually since then, it covers micro, small,
medium and large firms, and includes questions on the demand for and the availability of credit for firms
along with invaluable additional firm-specific information. In 2013, it became an annual publication. The
SAFE survey covers all EU countries.

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It is generally accepted that SMEs are more confident when talking to banks about financing and obtaining
the desired results than when talking to equity investors and venture capital firms (20%). This is so even
when accounting for the fact that the former source of financing is relevant to a greater proportion of SMEs.
SMEs prefer debt financing over equity financing. Less than half of SMEs perceive no limitations in their
access to future financing, namely 41% in the EU27. Those that do perceive such limitations most often cite
insufficient collateral or guarantees, and interest rates and prices of financing being too high. The more
enterprises grow and the larger they become, the fewer obstacles they see in obtaining financing. One out of
four SMEs in the EU28 needs financing between EUR 25,000 and EUR 100,000 to realise their growth
ambitions. SMEs active in industry require the largest amounts to realise their ambitions and these required
amounts increase with enterprise size.

Objectives

You will be asked to perform certain tasks. The point of this case study is to make students familiar with the
problem of liquidity during the financial crisis and explore both the attitude of banks and economic agents.
Transfer of money via the banking system and the demand for it are probably the main debate that takes
place nowadays and above and beyond the theoretical knowledge we should focus on real data and
investigate real economic issues. Hence you need to provide a thorough technical summary of your research
through a descriptive statistical analysis in order to deliver concrete results. Students are required to
present their work from week 3 till week 8. This means that there will be 6 rounds of presentations
throughout the semester. Then you will be asked to deliver a written report of 2,500 words, excluding the
Appendix and the Bibliography as the final written report which is part of the assessment strategy. Please
provide and present the data gathered, figures or whatever you think that will help you in building up your
arguments. It is essential to incorporate in your analysis, general macroeconomic indicators, (use
datastream, press, reports, Eurostat, Thomson-Reuters, Bloomberg, the relevant literature (try to link with
the current developments in academic literature) and of course make use of the surveys (BLS & SAFE) from
the European Central Bank

Research Questions/Tasks

Critically analyse the following questions. You need to go through the provided resources along with the
relevant literature. Your report/presentation should produce a logical sequence of arguments based on the
available resources. Each group (up to 4 students) should choose one of the following practical questions:

1. Using the BLS identify and measure the effect of the global financial crisis relative to the supply of
financing. Use as a cut-off point the second semester of 2008 and produce an ex ante and ex post
analysis.

2. Dichotomize the Eurozone countries into financial stressed & not financially stressed and try to
estimate the effect of the crisis between the two groups. What are the differences and why? The
magnitude of the effect of credit constraints is even more severe in the most hit countries by the
crisis?

3. Concentrating on the most hit economies (PIIGS) or only countries in memorandum explain
similarities and differences among them regarding the supply of financing. How differently this
affected each one of them? How the demand for loans was affected? Make use of both surveys.
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 4. Try to link, using mainly the SAFE survey, the size of the enterprises with the easiness of the access
to credit. Identify diachronically the evolution of this issue comparing one less stressed economy
with one widely hit economy.

5. Using BLS, examine the factors affecting credit standards as applied to the approval of loans to
enterprises. Point out the turning points (tightening and easing of standards) and analyse the
weighting on credit recovery. Choose at least 3 countries of your choice.

6. By using the SAFE survey, please comment on the issue of discouraged borrowers. Please make sure
to compare against the rationed borrowers, analyse their characteristics. Why would you think that
borrowers even needing credit are discouraged from asking for a loan?

Indicative References

1. Asea, P.K. and S.B. Blomberg (1997), Lending Cycles, National Bureau of Economic Research Working
Paper Series 5951.
2. Bayoumi, T. and O. Melander (2008), Credit Matters: Empirical Evidence on U.S. Macro-Financial
Linkages, International Monetary Fund Working Paper 08/169.
3. Blaes, B. (2011), Bank-related loan supply factors during the crisis: an analysis based on the German
bank lending survey, Deutsche Bundesbank Discussion Paper Series 1, No. 31/2011.
4. Ciccarelli, M., A. Maddaloni and J.L. Peydró (2010), Trusting the bankers: A new look at the credit
channel of monetary policy, European Central Bank Working Paper Series 1228.
5. Cunningham, T.J. (2006), The predictive power of the senior loan officer survey: do lending officers
know anything special?, Federal Reserve Bank of Atlanta Working Paper Series 2006-24.
6. de Bondt, G., A. Maddaloni, J.L. Peydró and S. Scopel (2010), The Euro area bank lending survey
matters: Empirical evidence for credit and output growth, European Central Bank Working Paper
Series 1160.
7. Del Giovane, P., G. Eramo and A. Nobili (2010), Disentangling demand and supply in credit
developments: A survey-based analysis for Italy, Banca d'Italia Working Paper Series 764.
8. Hempell, H.S. and C. Kok Sørensen (2010), The impact of supply constraints on bank lending in the
euro area – crisis induced crunching?, European Central Bank Working Paper Series 1262.
9. Kuchler, A. (2012), The interplay between credit standards and credit demand: Microeconometric
evidence from Denmark, Danmarks Nationalbank Working Paper 82.
10. Lown, C.S., D.P. Morgan and S. Rohatgi (2000), Listening to loan officers: the impact of commercial
credit standards on lending and output, Federal Reserve Bank of New York Economic Policy Review,
Vol. 6, No. 2, July.
11. Lown, C.S. and D.P. Morgan (2002), Credit effects in the monetary mechanism, Federal Reserve Bank
of New York Economic Policy Review, Vol. 8, No. 1, May.
12. Maddaloni, A. and J.L. Peydró (2010), Bank risk-taking, securitisation, supervision and low interest
rates: Evidence from the Euro area and the U.S. lending standards, European Central Bank Working
Paper Series 1248.
13. Swiston, A. (2008), A U.S. Financial Conditions Index: Putting Credit where credit is due, International
Monetary Fund Working Paper 08/161.
14. van der Veer, K.J.M. and M.M. Hoeberichts (2013), The level effect of bank lending standards on
business lending, De Nederlandsche Bank Working Paper 396.

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 15. Bernanke, B. S. and M. Gertler (1989), “Agency Costs, Net Worth and Business Fluctuations”, The
American Economic Review, Vol. 79 (March) p. 14-31.
16. Bernanke, B. S. and M. Gertler (1995), ”Inside the Black Box: The Credit Channel of Monetary Policy
Transmission”, Journal of Economic Perspectives, Vol. 9 (4), p. 27-48.
17. Bank for International Settlements (2011), “The Impact of Sovereign Credit Risk on Bank Funding
Conditions”, CGFS Papers, No.43.
18. Ciccarelli, M., A. Maddaloni and J-L. Peydró (2013), “Heterogeneous Transmission Mechanism
Monetary Policy and Financial Fragility in the Euro Area”, ECB Working Paper, No. 1527.
19. Cornett, M. M., McNutt, J. J., Strahan, P. E., and H. Tehranian, 2011, “Liquidity Risk Management and
Credit Supply in the Financial Crisis”, Journal of Financial Economics, 101(2), p. 297–312.
20. Darvas, Z. (2013), “Banking System Soundness is Key to SME Financing”, Bruegel Policy Contribution,
Issue 2013/10.
21. Cole, R. A., & Sokolyk, T. (2016). Who needs credit and who gets credit? Evidence from the surveys of
small business finances. Journal of Financial Stability, 24, 40–60. doi: 10. 1016/j.jfs.2016.04.002
22. Cowling, M., Liu,W.,Minniti,M.,& Zhang, N. (2016). UK credit and discouragement during the GFC.
Small Business Economics, 47(4), 1–26.
23. Freel, M., Carter, S., Tagg, S., & Mason, C. (2012). The latent demand for bank debt: characterizing
“discouraged borrowers.”. Small Business Economics, 38(4), 399–418.
24. Mac an Bhaird C., Vidal J.S., Lucey B. (2016). Discouraged borrowers: Evidence for Eurozone SMEs.
Journal of International Financial Markets, Institutions and Money, v 44, pp. 46-55.
25. Xiang, D., Worthington, A. C., & Higgs, H. (2015). Discouraged finance seekers: an analysis of
Australian small and medium sized enterprises. International Small Business Journal, 33(7), 689–707.
26. Kallandranis, C., Anastasiou D., and Drakos K. (2020). Self-Rationing in European Businesses:
Evidence from Survey Analysis forthcoming Finance Research Letters
27. Kallandranis C. (2020). An Overview of Systematically Rejected Loan Applicants in Eurozone SMEs:
Evidence from SAFE survey, forthcoming in Empirical Economics Letters
Resources:
https://www.ecb.europa.eu/stats/money/surveys/sme/html/index.en.html
http://www.imf.org/external/data.htm
http://ec.europa.eu/eurostat
http://ec.europa.eu/eurostat/statistics-explained/index.php/Statistics_on_small_and_medium-
sized_enterprises

https://www.ecb.europa.eu/stats/ecb_surveys/bank_lending_survey/html/index.en.html

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https://www.ecb.europa.eu/stats/ecb_surveys/safe/html/index.en.html

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