Financial System of Economy

obligatory courses

(in Polish) Podstawy matematyki, mikroekonomia, podstawy finansów.

The classes will present the principles of functioning of financial markets in the market economy system, in particular the role of money, a detailed description of financial instruments and the characteristics of the activities of market participants, including financial intermediary institutions

Lecture:

1. Evolution of currency systems and forms of money in economic history

- Definition and functions of money

- Origin of money, currency systems - metallic money, convertible paper money, inconvertible paper money

- Forms of modern money - cash money, non-cash money, electronic money

2. Tasks and structure of the financial system of a market economy

- Financial resources and streams against the background of real resources and streams (material, human)

- Financial assets of the economy: money - financial capital

- Basic canons of the functioning of the financial system of the economy: liquidity - risk - income. Liquidity as a feature of economic assets, business entities, markets and the financial system as a whole

3. Financial instruments

- Classification of financial instruments in a market economy according to the following criteria: type of law represented, maturity and maturity dates, redemption methods, discount and interest-bearing

- Contractual (interest) and capital income from financial instruments

4. Interest and discounting

- The essence and definitions of the interest rate

- Price of money over time

- Discounting using commercial and mathematical methods

- Nominal, real and effective (actual) interest rate

5. Financial intermediation institutions

- Creditors – savings (households) and debtors (enterprises and the state) in the economic system

- Classification of financial intermediaries in the economy

- Method of obtaining capital, risk and investment strategies of basic groups of financial intermediaries: deposit and loan banks, insurance companies, pension and investment funds, investment banks, factoring and leasing companies, etc.

- Innovations in finance (FinTech)

6. Financial markets in the economy

- Classification of financial markets in the economy: money and capital

- Interbank currency market (FOREX)

- Interbank money market - WIBID, WIBOR, LIBOR, EURIBOR rates, etc.

- Forms of markets in the economy: primary and secondary markets, public trading

- Spot and forward markets. Forwards, futures and options transactions.

Exercises:

1. Financial markets - classification and functioning

2. Money and its current forms

- history of money and its types

- money supply in the economy (monetary aggregates)

- money creation mechanism – theoretical issues and analysis of money supply data

3. Financial instruments

- money bills, treasury bills, certificates of deposit, commercial papers

- shares, pre-emptive rights to shares, rights to shares, depositary receipts

- bonds (convertible, with warrant, revenue, etc.)

- instruments issued by investment funds (participation units, investment certificates), settlement units of pension funds

- covered bonds (mortgage and public)

- insurance instruments (policy)

- bills of exchange, checks

- derivatives (forwards, futures, options, warrants, swaps)

4. Elements of financial mathematics

- interest rate (nominal, real, effective)

- simple and compound interest

- discounting

- current and future value of the annuity

5. Characteristics of financial intermediation institutions

- funds (open investment funds, closed-end investment funds, hedge funds, Venture Capital and Private Equity funds, pension funds)

- insurance companies

- banks (deposit and credit, investment, universal)

- stock exchanges and over-the-counter institutions (e.g. Bondspot and Catalyst)

6. Factoring, forfeiting, leasing and securitization.

7. Changes in intermediation and financial services, including FinTech

Basic item:

 Górski M., 2018, Rynkowy system finansowy, Warszawa: PWE

Additional literature:

 Czerwińska T., Jajuga K., (red.), 2015, Ryzyko instytucji finansowych, Warszawa: C.H. Beck

 Górka J. (red.) 2018, System finansowy w multiperspektywie, Warszawa: Wyd. Naukowe Wydziału Zarządzania Uniwersytetu Warszawskiego.

 Górka J., 2018, Banki, GAFAM, FinTech w gospodarce współdzielenia – equilibrium współpracy i konkurencji w „Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu”, nr 531 (temat numeru: „Bankowość, rynki finansowe, zarządzanie ryzykiem”), s. 149-158

 Jajuga K., Jajuga T., 2015, Inwestycje, Warszawa: PWN

 Neave E., 2011, Modern Financial Systems: Theory and Applications: John, Wiley & Sons

 Owsiak S., 2015, Finanse, Warszawa: PWN

 Sopoćko A., 2020, Rynkowe instrumenty finansowe, Warszawa: PWN

Student after completing the course:

in terms of knowledge:

• Knows and understands the terminology and basic theoretical models in the financial system of the economy (K_W01)

• Knows and understands at an advanced level the principles, procedures and practices relating to entities and the financial system of the economy (K_W02)

• Knows and understands at an advanced level economic theories and models regarding the functioning of entities and the financial system of the economy (K_W03)

• Knows and understands technological, social, political, legal, economic and ecological processes and phenomena and their impact on financial decisions in organizations, the functioning of the organization and the entire economy (K_W05)

in terms of skills:

• Is able to use the theory of the financial system of the economy to recognize, diagnose and solve problems related to key functions in the organization (K_U01)

• Is able to correctly interpret technological, social, political, legal, economic and ecological processes and phenomena and their impact on the functioning of the organization (K_U02)

• Is able to independently and collectively prepare analyses, diagnoses and reports on the functioning of entities and the entire economy and present them communicatively, using IT and communication tools (K_U03)

• Is able to plan and organize own and team work (K_U05)

• Has the ability to self-educate and improve acquired qualifications (K_U06)

in terms of basics:

• Is ready to assess and critically approach situations and phenomena related to the functioning of the organization, sector and the entire economy (K_K01)

• Is ready to comply with professional ethical standards (K_K03)

Learning outcomes will be verified on an ongoing basis by means of tasks performed by participants during the exercises and, at the end, when passing the exercises and the exam.

Lecture:

Final written exam stationary or on the e-Nauka portal (various forms of instructions possible, including closed single- and multiple-choice test questions, tasks, definitions, open questions)

Exercises:

Learning outcomes will be verified on an ongoing basis during work during classes, including discussions, speeches, individual and team work and homework, as well as at the end of classes during the final colloquium.