CIB Coursepack:
Instructor-Prepared Notes and Exercises for Corporate and Investment Banking

The coursepack for this course will closely follow the in-class lectures. In a sense, the coursepack is intended to free the student from the burden of taking copious notes; the instructor would prefer to focus more on the content of the lecture material. Many students in the course will use the Coursepack as their primary text (a few may use the Coursepack as their only set of readings, though this is not recommended). There will be many exercises and problems in this coursepack. Students should be certain to understand all relevant readings in the Coursepack and be able to work through all relevant exercises.

Students requiring review in mathematics or elementary finance should do so before the second week of the term (This is important). Comfort with all of the material in Chapters 2 through 8 of the Elementary Mathematics Review will be essential to this course. In addition, material covered in an introductory finance course  will be necessary for keeping up with the course. Material related to introductory finance may be obtained through Chapters 4 through 6 of the Elementary Mathematics Review . Material in Chapters 7 and 8 of the Elementary Mathematics Review will be might be helpful later as well. End of chapter solutions are provided as well. Finally, many students will find readings that may be added from time-to-time on the Additional Readings page to be helpful for exam preparation or otherwise interesting. A separate page for exam preparation may also prove quite useful. There are links to sample exams as well. Feel free to report any difficulties to or obtain any needed assistance from John Teall. 
 LESSON 1
Financial Institutions and Money: An Introduction
    1.    An Introduction to Financial Institutions
    2.    An Introduction to Money
    3.    The Payments System
    4.    An Introduction to Central Banks
    5.    An Introduction to Financial Intermediation
    6.    Financial Sector Growth and Real-Sector Productivity
    7.    Financialization
Readings and Other Resources: Coursepack: Chapter 1; Video: Cryptocurrency, Distributed Ledgers and Blockchains: https://vimeo.com/351197360/789a2fab92  

LESSON 1
A Brief History of Pre-20th Century Banking
      1.       Early History of Money

2.       A History of Merchant Banking through the Reformation

3.       The Expansion and Modernization of European Banking

4.       Origins of Central Banking

5.       A Brief History of Investment Banking

 

Readings and Other Resources: Coursepack: Chapter 2; Video: The Medieval Bank, the Medici and the Church! Economics!: https://www.youtube.com/watch?v=DVmNa52Qpwc

 
LESSON 2
Essential Microeconomic and Financial Theory for Banking
  1. Introduction to Microeconomic and Financial Theory for Banking
  2. The Principal-Agent Problem
  3. Moral Hazard
  4. Limited Shareholder Liability and Moral Hazard
  5. Black-Scholes Valuation of Corporate Securities
  6. Contracting
  7. Adverse Selection and Lemons Markets
  8. Mitigating Information Problems

Readings and Other Resources: Coursepack: Chapter 3; Video: The Black-Scholes Options Pricing Model: https://vimeo.com/351000132/6a9d6fa53a; Video: Corporate Securities as Options: https://vimeo.com/346202567/6c1543a740; Video: Implied Volatility: https://vimeo.com/351001396/65adcc8764 

LESSON 2
Depository Institutions and and Corporate Banking
  1. Commercial Banks
  2. Variations of Depository Institutions and Banks
  3. What Makes Banks Special?
  4. Corporate Bank Lending Activities
  5. Other Corporate Banking Activities

Readings and Other Resources: Coursepack: Chapter 4

 LESSON 3
Bank Risk     Part II: Corporate Banks and Securities Markets

1.   Sources of Bank Risk

2.   Credit Risk

      3.   Interest Rate Risk

4.   Asset-Liability Management

5.   Bank Investment in Government Securities Markets

6.   Bank Issues and Sales of Securities

7.   Structured Finance and Derivative Instruments

8.   Eurocurrency Issues


Readings and Other Resources: Coursepack: Chapter 5; Coursepack: Chapter 6

 
LESSON 3
Bank Stress, Failure and Crises      Part II: Bank Regulation and Regulators
  1. Bank Stress and its Measurement
  2. Bank Failure and its Resolution
  3. Contagion, Interconnectedness, and Systemically Important Financial Institutions
  4. Bank Crises
  5. Introduction to Bank Regulation
  6. Prudential Regulation
  7. Bank Regulators
  8. Managing the Moral Hazard Problem

Readings and Other Resources: Coursepack: Chapter 8; Coursepack: Chapter 9; Note that Chapter 7 has been skipped. Video: http://www.jteall.com/structuredfinance.mp4.

 

LESSON 4
Introduction to Investment Banking
  1. Investment Banks and their Roles
  2. Investment Banking Since the Great Depression
  3. Introduction to IPOs: Going Public
  4. Benefits and Costs of Going Public
  5. Investment Banking and the Underwriting Process
  6. Alternatives to Traditional Underwriting
  7. Regulation of IPOs and Securities Issuance

Readings and Other Resources: Coursepack: Chapter 10; Video: Goldman Sachs at 150 (2019): https://www.goldmansachs.com/our-firm/history/goldman-sachs-at-150/ or  https://www.youtube.com/watch?v=wonEywOwpEo and at 9 other Youtube sites or at Amazon Prime: https://www.amazon.com/Goldman-Sachs-at-150/dp/B07R7XHDRF.


LESSON 5
Anomalies, Seasoned Offerings and Debt Underwriting
  1. The IPO Underpricing Anomaly
  2. Explaining the Short-run IPO Anomalies
  3. Long-Run IPO Performance
  4. Seasoned Equity Offerings
  5. Debt Underwriting
    6. Student Presentations as Appropriate
    Review and Q&A as Motivated by Students
    Any Catch-up or Additional Items
            Readings and Other Resources:Coursepack: Chapter 11.
 
EXAM: June 4 (Tentative)


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updated 04/15/2021