Course Code: Credit: 3 Year: Semester:

Course Title: Theory and Practice of Banking Course Type:

Rationale of the Course:

This course presents the students underlying the nature and organization of banks and other financial intermediaries
and analyses their basic functions in the modern economy.

Course Objective
The course provides an integrated overview of both theoretical and practical issues related to the modern
banking business. The introductory lecture outlines the role and functions of the financial system and the
nature of financial intermediation with a particular emphasis on current issues in banking. It also covers the
main activities and types of banks (e.g., retail, commercial, Islamic, global banking), it illustrates theories
and practice of central banking. The third topic regards the structure of the banking systems in different
countries and the corporate governance and organizational arrangements in banking. Finally, the course
provides an insight on ethics in banking and professional and effective management.

Course Content:

1. Introduction to banking: The nature of financial intermediation, The role of banks,

Information economies, Why do banks exist? Theories of financial intermediation, The
benefits of financial intermediation

2. Bank activities and services: What do banks do?, Banks and other financial institutions,
Banking services, Sustainable and ethical banking, What is international banking? Brief history
of international banking, Why do banks go overseas?, Types of bank entry into foreign markets,
International banking services

3. Types of banking: Traditional versus modern banking, Retail or personal banking, Private
banking, Corporate banking, Investment banking, Islamic banking

4. Theory of central banking: What are the main functions of a central bank? How does monetary
policy work? Monetary policy functions of a central bank, why do banks need a central bank?
Should central banks be independent?

5. Bank regulation and supervision: The rationale for regulation, Types of regulation, The financial
safety net, Limitations of regulation, Causes of regulatory reform, Bank capital regulation

6. Bank financial management: Asset–liability management (ALM), Liquidity management and the
importance of reserves, Capital adequacy management, Off-balance-sheet (OBS) business in
banking, Loan sales and the process of securitization, Derivative business in banking

7. Banking risks: Credit risk, Interest rate risk, Liquidity (or funding) risk, Foreign exchange risk,
Market (or trading) risk, Country and sovereign risk, Operational risk, Off-balance-sheet risk,
Other risks, Capital risk and solvency, Interrelation of risks

8. Bank risk management: General risk management, Credit risk management, Managing the
lending function, Managing interest rate risk, Managing liquidity risk, Managing market risk,
Managing operational risk, International risk assessment

9. Banks and markets: Bank intermediation, markets and information, The development of the
securitization market, Modern securitization process, The ‘new wave’ of securitization, Types of
securitization, Securitization, credit-rating agencies and insurers, The future of securitization

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 10. Bank failures and banking crises: The determinants of bank failure, Early warning systems for
bank soundness, Bank restructuring, Banking crises

Course Learning Outcomes (CLO):

On successful completion of the course, students will be able to:

CLO 1: Understand and critically discuss the roles and functions of different types of banks
CLO 2: Understand and critically evaluate the roles and functions of central banks
CLO 3: Understand and critically discuss the structure of the major banking markets
CLO 4: Discuss the main types of risk that banks face and explain their relevance to the stability of the
financial system.
CLO 5: Explain why banks need regulation, and illustrate the main reasons for and against bank
regulation.
CLO 6: Critically discuss corporate governance arrangements in banks and ethical issues in banking
CLO 7: Communicate their knowledge and understanding of banking issues using written, verbal and
visual expression

Mapping of CLOs to PLOs:

PLO 1 PLO 2 PLO 3 PLO 4 PLO 5 PLO 6 PLO 7 PLO 8
CLO 1 X
CLO 2 X
CLO 3 X
CLO 4 X X
CLO 5 X
CLO 6 X
CLO 7 X

Mapping of Course Learning Outcomes (CLOs) with the Teaching – Learning and Assessment
Strategy
CLO Teaching – Learning Strategy Assessment Strategy
CLO 1 Lecture Quiz and Written Test
CLO 2 Lecture & Group Discussion Assignment & Written Test
CLO 3 Lecture & Class Participation Quiz and Written Test
CLO 4 Lecture Case Study & Group Discussion Quiz, Assignment and Written Test
CLO 5 Lecture & Group Discussion Assignment, Written Test
CLO 6 Flipped Classroom & Lecture Written Test
CLO 7 Computer Lab Work, Flipped Classroom, Computer Group Presentation
Lab Work

Banking System: Origin-Types-Banking and management-Importance.

2. Central Bank System: Function-Relations with state and economic development and

developing economics-Bangladesh Bank-Organization-Objectives- functions and policies.

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3. Commercial Bank System: Structure-Management and internal organization-ReportingRegulation-
policies and organization-Investment portfolio-Regulation and management-

Investment account-Policy and organization-Analysis of financial statement-Balance sheet

items-Net worth's budgets -Ratio analysis.

4. Specialized Bank: Bangladesh Development Bank Limited (BDBL)-Bangladesh Krishi Bank

(BKB)-Rajshahi Krishi Unnayan Bank (RKUB)-Investment Corporation of Bangladesh (ICB)-

Organization and management-Functions-Objectives and policies.

5. Sources and uses of Funds: Performance evaluation and bank failure- Basel Accord I and
IIRegulatory arrangement for banks.

6. Electronic Banking: Debit card- wire transfer- Mobile banking- Problem of electronic

banking- Electronic banking in Bangladesh.

7. Training on Bank Management: Organization-Programs and objectives-Bangladesh Institute of

Bank Management (BIBM)-Other bank institutes and centers.

Books Recommended:

1. S. A. Shakoor : Hand Book of Bank Management

2. Govt. of Bangladesh : The Bangladesh Banks order 1972

3. M. Radha Swamy and S. V.

Vasydevan

: A Text Book of Banking

4. Peter S. Rose : Commercial Bank Management

5. A.R. Khan : Bank Management

6. R.M. Debnath : Banks and Legal Environment

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