Economic Analysis of Financial Institutions 2600-MSFRz1zifAEIF
Lecture
Economic analysis - introduction
• Definition, types and functions of economic analysis;
• Data sources applied in: (1) macroeconomic analysis of financial sector; (2) microeconomic analysis of entities operating in different sectors;
• Financial statements of institutions – solo and consolidated reports;
• Types of financial institutions: credit institutions, insurance companies, investment companies – why should we analyze them?
• Changes in Polish and EU financial market structure.
Economic analysis of credit institutions
• Financial statements of credit institutions: (1) Balance - sheet: Assets (cash, NBP funds, interbank loans, loans to non-financial sector, investments in bonds and shares); Liabilities and Equity (financial sector’s liabilities; households’ deposits; companies’ deposits; public sector’s deposits; equity) (2) Capital adequacy: own funds; capital requirements (3) Profit and loss account: interest and non-interest income and expenses; operating expenses, net income before provisions, net provisions, income before tax, income after tax.
• Macro analysis of banking sector – relationship between macroeconomic variables and financial data of banking sector: dynamic analysis; comparative analysis of Polish versus EU banking sector data – cross sectional analysis; Micro analysis – bank reporting (COREP i FINREP, Pillar III capital adequacy); ratio analysis: balance sheet and income statement structure; ratios of liquidity, efficiency and quality of bank lending portfolio.
Economic analysis of insurance companies
• Financial statement of insurance company: (1) Balance sheet: assets (investments and their role); Liabilities and equity (capital and reserves; technical provisions); (2) Solvency of insurance company: ratio of coverage of solvency margin by own funds, ratio of coverage of guarantee fund by own funds, ratio of coverage of technical provisions by assets . (3) Profit and loss account: Technical account profit and loss account [gross written premiums, earned premiums, claims incurred, balance on technical account); investment income and costs; net profit (loss) ;
• Macro analysis of insurance sector – relationship between macroeconomic variables and financial data of insurance sector: dynamic analysis; comparative analysis of Polish versus EU insurance sector data – cross sectional analysis [density measures and penetrations measures];
• Micro analysis –ratio analysis: balance sheet and income statement structure; liquidity, efficiency and retention ratios.
Economic analysis of investment fund
• Financial statement of investment fund: (1) Balance sheet; (2) Profit and Loss Account; (3) Changes in net assets statement; Macro analysis of mutual funds sector – relationship between macroeconomic variables and financial data of investment funds sector: dynamic analysis; comparative analysis of Polish versus EU UCITS sector data – cross sectional analysis; Micro analysis – assets value, mutual funds investment unit, Synthetic Risk and Rewards Indicator [UCITS IV]
Economic analysis of investment companies
• Financial statement of investment institutions: (1) Balance sheet; (2) Solvency of investment insitutions (3) Profit and Loss Account;
• Macro analysis of investment insitutions sector – relationship between macroeconomic variables and financial data of investment insitutions sector: dynamic analysis; comparative analysis of Polish versus EU investment insitutions sector data – cross sectional analysis;
• Micro analysis –ratio analysis: balance sheet and income statement structure; ratios of liquidity, efficiency and capital adequacy.
Workshops:
The topics covered during workshops are related to problems which are considered during lectures, however, with particular emphasis on their practical application. During classes students are obliged to conduct economic analysis of financial institutions. The subject matter shall include:
1. Economic analysis of financial sector with application of following data sources: ECB, World Bank Database (e.g. Global Financial Development Database), IMF, NBP, PFSA;
2. Economic analysis of banking sector and individual banks with application of following data sources: ECB, WB, IMF, NBP, PFSA, Web pages of banks, Monitor Polski B;
3. Economic analysis of insurance sector with application of following data sources: ECB, WB, IMF, PFSA, CEA, PIA , Web pages of insurance companies;
4. Economic analysis of mutual funds sector with application of following data sources: ECB, WB, IMF, NBP, PFSA;
5. Economic analysis of investment companies sector with application of following data sources: ECB, WB, IMF, NBP, PFSA.
Type of course
Mode
Learning outcomes
After course completion (lecture and workshops) student:
Lists types and functions of economic analysis of financial institutions;
Identifies data sources necessary to conduct economic analysis of financial institutions;
Can identify specific characteristics of financial institutions and can differentiate between financial institutions by using their financial statements;
Identifies changes to financial intermediaries sector in Poland in the last 10 years;
presents structure of statements reported by financial;
lists, describes, and compares ratios applied in economic analysis of financial institutions;
assesses financial and economic condition of financial institutions with application of SWOT analysis.
Assessment criteria
Lecture:
Final written exam. The questions include: definitions of notions intruduced during lecture; written response aimed at analysis of selected financial institution, e.g. the student should assess the financial condition of the institution (considering industry norms and reference values). The student should also be able to competently define and assess aggregated measures of financial development (e.g. Lerner, Boone itp).
Workshops:
Completion of analytical tasks during classes, homework completion (all analytical reports must be delivered in print), attendance in workshops (only one absence is acceptable).
Percentage intervals and marks (valid for both lecture and workshops):
0-59% - 2 (unsatisfactory)
60-65% - 3 (passed)
66-74% - 3+ (passed plus)
75-84% – 4 (good)
85-94 % – 4+(good plus)
95-100% - 5 (very good / excellent)
Bibliography
Basic:
• Gołębiowski G., Tłaczała A., 2009, Analiza finansowa w teorii i praktyce, Difin: Warszawa
• Pomykalska B., Pomykalski P., 2007, Analiza finansowa przedsiębiorstwa, PWN: Warszawa
Supplementary literature and data sources:
• Olszak M. Normy adekwatności kapitałowej, WZ UW, Warszawa 2009
• Reports on situtation of:
- financial sector (NBP, ECB, WB, IMF),
- banking sector(UKNF),
- insurance sector (UKNF, CEA, PIU),
- capital market entities (UKNF, IZFA, IDM).
• Individual reports of selected financial institutions (Monitor Polski B)
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: