Financial Institutions

Instructor Information

• Instructor: Dr. Marcus Rossi (Associate Professor of Finance)
• Email: mrossi@university.alkimi.ai
• Office: Tidewell Hall 312
• Office Hours:
  • Wednesday & Thursday: 9:00–10:30 a.m. (In person, Tidewell Hall 312)
  • Tuesday: 4:00–5:00 p.m. (Virtual via Zoom; link posted in Canvas)
  • Also available by appointment.

Course Description

Commercial banks, credit unions, insurers, investment banks, and funds; interest rate determination, the Federal Reserve, bank regulation and capital requirements, and managing interest rate and credit risk. FIN 340 provides an in-depth analysis of the operations, regulatory environment, and risk management practices of modern financial intermediaries. The course explores commercial banking, thrifts, credit unions, insurance companies, investment banks, and asset management funds within the context of Federal Reserve monetary policy and global capital markets. Students learn to measure and manage critical institutional vulnerabilities—including interest rate risk, credit risk, liquidity risk, and foreign exchange risk—using duration gap analysis, credit scoring models, stress testing, and Basel III regulatory capital requirements.

Prerequisites

FIN 301.

Measurable Student Learning Outcomes

Upon successful completion of FIN 340, students will be able to:

1. Analyze Financial Intermediation and Central Banking: Examine the economic functions of depository and non-depository intermediaries, credit creation mechanics, and Federal Reserve monetary policy transmission channels.
2. Evaluate Financial Institution Financial Statements: Deconstruct commercial bank balance sheets and income statements using Return on Equity (ROE) decomposition, Net Interest Margin (NIM), and asset quality ratios.
3. Measure and Manage Interest Rate Risk: Quantify institutional exposure to interest rate fluctuations using the repricing model, maturity model, and duration gap analysis to execute balance sheet immunization.
4. Model Credit and Liquidity Risk: Assess default probabilities, credit scoring algorithms, loan portfolio concentration, and evaluate bank liquidity management strategies during funding shocks.
5. Critique Financial Regulations and Capital Adequacy: Evaluate Dodd-Frank provisions, FDIC deposit insurance pricing, Basel III risk-weighted capital ratios, and bank stress testing protocols.

Required Course Materials & Approximate Costs

1. Anthony Saunders, Marcia Millon Cornett, and Erhemjamts Otgontsetseg. Financial Markets and Institutions. 8th ed., McGraw Hill, 2024. Approx. $70 digital rental, $145 print purchase.
2. Federal Reserve Bank Case Studies and Regulatory Policy Readings. Free digital access provided via Canvas.
3. Total estimated cost: $70 to $145.

Generative AI Policy (AI Level 2: AI Permitted with Disclosure for Specified Tasks)

In accordance with Alkimi University Academic Policies (Student Handbook §5.8), FIN 340 operates under AI Level 2.

• What is permitted: You may use generative AI tools to review central bank monetary policy definitions, look up historical interest rate regimes, and check spreadsheet formulas for duration gap calculations.
• What is prohibited: You may not use AI tools during in-class examinations, nor may you submit AI-generated bank financial analysis reports, regulatory briefs, or asset-liability management solutions as your own work.
• Disclosure: All submitted project deliverables and homework problem sets must disclose any generative AI tools utilized, summarizing the specific prompts and how outputs were checked for accuracy.

Grading Components and Weights

• Midterm Examination 1: 20% (In class, Thursday, September 24)
• Midterm Examination 2: 20% (In class, Thursday, October 29)
• Bank Asset-Liability Management (ALM) Project: 20% (Due Friday, November 20 at 11:59 p.m.)
• Financial Institution Problem Sets: 15% (Five quantitative risk modeling problem sets submitted via Canvas on Fridays at 11:59 p.m.; lowest score dropped)
• Regulatory & Monetary Policy Briefings: 5% (Online reading quizzes and central bank policy briefings completed in Canvas)
• Comprehensive Final Examination: 20% (Wednesday, December 16, 2026, 1:30–3:30 p.m.)

Grading Scale (Alkimi University Standard)

• A: 93–100% | A-: 90–92%
• B+: 87–89% | B: 83–86% | B-: 80–82%
• C+: 77–79% | C: 73–76% | C-: 70–72%
• D+: 67–69% | D: 60–66% | F: Below 60%
• Extra credit: No extra credit assignments are offered in FIN 340. Students should concentrate on completing all problem sets, the ALM project, and thorough exam preparation.

Course Schedule (Fall 2026)

Course Policies

Attendance Policy

Consistent attendance in Lovell Hall 210 is essential for engaging in institutional case discussions and mastering quantitative balance sheet models. If you need to miss class for an excusable reason, notify Dr. Rossi as early as possible and arrange to review notes with a peer. Students who miss the first two class meetings without notifying the instructor may be dropped. Students may miss class for religious observance without penalty if they notify the instructor in writing within the first two weeks of the semester (by Wednesday, September 9, 2026). Absences for university-sponsored activities (athletics, performances, conferences) are excused with a letter from the sponsoring office at least one week in advance.

Late Work Policy

Problem sets and the Bank ALM Project are penalized 10% per calendar day late and will not be accepted after three days past the deadline. Canvas concept quizzes close at the deadline and cannot be completed late.

Final Exam Policy

The final examination (Wednesday, December 16, 2026, 1:30–3:30 p.m.) is scheduled by the University Registrar and can't be moved without the Dean's written approval (Faculty Handbook §5.5). A student with three or more final exams on the same calendar day may reschedule one of them. Requests go to the instructor of the middle exam by the last day of classes. For this term, send the request by Wednesday, December 9, 2026 (Student Handbook §6.4).