GAMBY Medical and Business College

Master of Business Administration (MBA) Program

MBAd 731 Financial Markets and Institutions

Credit Hours 2
Prerequisite ACFN 631
Course Description:
The course describes the financial system structure of financial markets, their role and
functions, non-deposit taking and deposit taking financial institutions, their role and functions
including the regulation of both the financial markets and institutions. Financial markets
finance much of the expenditure by corporations, governments, and individuals. Financial
institutions are the key intermediaries in financial markets because they transfer funds from
savers to those who need funds. This course describes financial markets and institutions that
serve those markets. It provides a conceptual framework that can be used to understand why
markets exist. Each type of financial market is described, with a focus on the securities traded
in that market and the participation by financial institutions.
Course Objective:
The objective of the course is to acquaint the learners with the nature, organization and
functioning of financial markets and institutions including their regulation and control.
Thus, up on completion of the course, participants are expected to:
 Understand financial markets and their role in the economy
 Explain the main players in the financial markets
 Describe the wide range of financial instruments available in the financial markets
 Understand the financial regulatory environment in which financial institutions operate
 Explain the risk exposures of financial institutions and how they manage them
 Understand the structure of financial institutions operating in Ethiopia and the regulatory
framework
Course Content:
1. Introduction to the financial system
1.1. The role of financial assets in the economy
1.2. Characteristics of financial assets
1.3. The role and type financial markets
1.4. The role and type of financial institutions
1.5. Financial asset innovation
2. Financial market structure
 2.1. Financial markets: Meaning and Importance
2.2. Money and capital markets
2.3. Primary and secondary markets
2.4. Foreign exchange markets
2.5. Derivate securities market
2.6. Stock market indexes
2.7. Capital market efficiency
2.8. Efficient market hypothesis (EMH)
3. Financial institutions and operation
3.1. Deposit taking financial institutions
3.2. Non-deposit taking financial institutions
4. Risk management in financial institutions
4.1. Types of risks incurred by financial institutions
4.2. Managing credit risk
4.3. Managing liquidity risk
4.4. Managing interest rate risk
5. Financial market regulation
5.1. Government’s role in financial markets
5.2. Theory of regulation
5.3. Financial regulation in the US and EU
6. Ethiopian financial markets and institutions (Group Assignment)
6.1. The formal, semi-formal and informal financial sectors
6.2. Financial market regulation in Ethiopia
Course Delivery:
Article review
Students will be required to find articles from a peer-reviewed journal related to any of the
topics in the course and submit their reviews. The review should include a concise summary
of the chosen article along with relevance to class discussion. The review includes description
of the problem addressed in each article, the methodology used, and the conclusion reached.
In addition, you should comment whether and to what extent conclusions of the articles apply
to other countries of the world.
Term Paper
This activity provides an opportunity to learn more about financial markets and institutions
practice in a selected area of interest. You are expected to write a report describing
phenomena, exploring an issue, or examining causal relations between variables of interest
and forward recommendations. The term paper is to be done in a group which will be formed
at during the first week of class. Group formation will be guided by the instructor.
Course Assessment:
 Article review…………………………......30%
 Group Assignment or Term paper…….......30%
 Final exam………….……………………...40%
Total………..………....................................100%
Text books:
Fabozzi, F, and Modigliani F(2014). Capital markets: Institutions and instruments, 10th
ed., Prentice Hall
Grinblatt M. and Timan S. (2011). Financial markets and Corporate strategy, 9th edition,
Tata McGraw-Hill
References:
Alan Shapiro (2006), Multinational Financial Markets, 8thed, Prentice Hall, Upper Saddle
River
Mishkin F, and Eakins S. (2006) Financial Markets and Institutions, 5thed.
AddisonWesley,New York
Madura, J. (2010), Financial Markets and Institutions, 9th ed. South-western Cenegage
Learning, Canada.
Grinblatt M. and Timan S.(2004).Financial markets and Corporate strategy, 2nd ed. Tata
McGraw-Hill
Madura, J. (2010) Financial Markets and Institutions, 9th ed. South-western Cenegage
Learning, Canada
AsratTesema (2003).Prospects & Challenges for Developing Securities Market in
Ethiopia: Analytical Review. R&D Management Journal, 15(1), 50-65.
Lema W. Senbet (2005).A Market based reform of the Ethiopian Financial System.
Fortune, Volume 6, No 278 & 279.
Towodro s(2000) Promoting Capital Market in Ethiopia: Opportunities & Challenges.
Seminar Proceedings, Mekele University, Mekele.
LemaWeldesenbet (2005) A market based reform of the Ethiopian financial system
Commercial Code of Ethiopia, Birhannena Selam Printing Enterprise,(1960).
Prospects for Capital market in Ethiopia. NBE(1998).
Proposal for promoting share Market in Ethiopia. A.A. Chamber of Commerce (March
18, 1999)
Proclamation 83/94 on Monetary & Banking System (1994).
Proclamation 84/94 on Banking Supervision (1994).
Proclamation 86/94 on Insurance Supervision (1994).
Proceedings of the Ethiopian Economic Association First and Second Annual Conference