MONEY AND FINANCIAL MARKETS



Course Description

This course exposes students to the theory and functioning of the monetary and financial sectors of the economy. It highlights the organization, structure and role of financial markets and institutions. It also discusses interest rates, monetary management and instruments of monetary control. Financial and banking sector reforms and monetary policy with special reference to India are also covered.

Course Outline

1. Money
Concept, functions, measurement; theories of money supply determination.

2. Financial Institutions, Markets, Instruments and Financial Innovations
a. Role of financial markets and institutions; problem of asymmetric information –
adverse selection and moral hazard; financial crises.
b. Money and capital markets: organization, structure and reforms in India; role of financial derivatives and other innovations.

3. Interest Rates
Determination; sources of interest rate differentials; theories of term structure of interest rates; interest rates in India.

4. Banking System
a. Balance sheet and portfolio management.
b. Indian banking system: Changing role and structure; banking sector reforms.

5. Central Banking and Monetary Policy
Functions, balance sheet; goals, targets, indicators and instruments of monetary control; monetary management in an open economy; current monetary policy of India.


THIS SECTION COMPRISES LAST 10 YEAR PAPERS OF MONEY AND FINANCIAL MARKETS.



THIS SECTION COMPRISES STUDY MATERIAL OF MONEY AND FINANCIAL MARKETS.



 Readings

1. F. S. Mishkin and S. G. Eakins, Financial Markets and Institutions, Pearson
Education, 6th edition, 2009.

2. F. J. Fabozzi, F. Modigliani, F. J. Jones, M. G. Ferri, Foundations of Financial
Markets and Institutions, Pearson Education, 3rd edition, 2009.

3. M. R. Baye and D. W. Jansen, Money, Banking and Financial Markets, AITBS,
1996.

4. Rakesh Mohan, Growth with Financial Stability- Central Banking in an Emerging
Market, Oxford University Press, 2011.

5. L. M. Bhole and J. Mahukud, Financial Institutions and Markets, Tata McGraw
Hill, 5th edition, 2011.

6. M. Y. Khan, Indian Financial System, Tata McGraw Hill, 7th edition, 2011.

7. N. Jadhav, Monetary Policy, Financial Stability and Central Banking in India,
Macmillan, 2006.

8. R.B.I. – Report of the Working Group: Money Supply Analytics and Methodology of Compilation, 1998.

9. R.B.I. Bulletin, Annual Report and Report on Currency and Finance (latest).

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