Banking and Finance
Goals and Contents
The Master in Banking and Finance has been designed to provide graduates with the necessary tools and skills for understanding financial markets and products from a banker’s perspective. Lugano being the 3rd financial marketplace in Switzerland provides an ideal venue to offer students with different back-grounds the best possible start for a successful career in banking or finance. The degree provides a background in finance meth-odology as well as the opportunity to go into more depth in selected topics of banking and finance by choosing electives. The Master programme stretches over two years (120 ECTS) and is structured to allow the students to personalise their study curricula according to their individual interests and educational backgrounds. It includes four semesters of lectures and seminars, and an internship. Typically, in the first semester students attend the foundation courses in order to acquire the basics of finance, accounting and statistics. The second and third semesters are dedicated to core courses and electives. The final thesis should show the candidate’s ability to integrate acquired knowledge in the advanced scientific analysis of a topic in banking and finance.
The Swiss Finance Institute at the University of Lugano coor-dinates the Master in Finance. The Swiss Finance Institute is an initiative sponsored by the Swiss Bankers Association with the purpose of achieving international excellence in banking and finance education and research at Swiss universities. The Institute is highly committed to banking and finance education in Ticino and Switzerland. The importance of the financial area in the Swiss economy strengthens the mission of the Institute to train the people required to meet the challenges of globalisation and the increasing competition in financial markets.
Student Profile
The Master in Banking and Finance is aimed at students who wish to pursue careers within the main sectors of banking and finance: Wealth Management, Private Banking, Investment Banking, Commercial Banking, and Corporate Finance. The programme is aimed at bachelor graduates with a background in economics, management, or related disciplines, who are interested in developing general expertise in finance and in the banking sector.
The Faculty and the students are an international group, with education and work experience from across the world. This fur-ther increases learning and cultural exchanges, as students also learn to work effectively with people from different cultures. Therefore a good command of English is a prerequisite.
Study Programme*
Sem. 1
Foundation Courses (39 ECTS)
Introduction to Probability Theory 3 Probability Theory and
Stochastic Processes 6
Statistics 6
Sem. 3 + 4
Electives (39 ECTS)
Fixed Income 6
Ethics and Law in Banking (in Italian only) 4
Structured Products 6
Advanced Corporate Finance 6
Corporate Banking 6
Entrepreneurship 3
Risk Management 6
Corporate Governance 6
Strategic Marketing 6
Human Resources Management 3 International Fiscal System 6
The programme may offer, during the Spring term, a choice of course-seminars normally worth 3 ECTS. Please refer to the official course time schedule for details.
Sem. 2
Core Courses (30 ECTS)
Private Banking 6
Introduction to Financial Engineering
or Derivatives 6
Financial Statement Analysis 6
Financial Intermediation 6 Economics of Information or Behavioural Finance 6 Applied Statistics 6 Accounting 6 Capital Markets 6 Corporate Finance 6 Sem. 4 Internship 6 Thesis 18 Total ECTS 120
Course Descriptions
Foundation Courses
Introduction to Probability Theory for Finance
The goal of this course is to introduce students to important probability theory concepts used in many areas of Finance. The course will cover mostly probabilistic models in a static setting and highlight to the end some of the possible extensions to model dynamic random phaenomena. The focus will be on key ideas and applications and less on formal developments. Several applied examples and exercises will highlight the topics covered in the class.
Probability Theory and Stochastic Processes for Finance The objective of this course is to introduce the probability theory and the theory of stochastic processes, so as to provide graduate students of finance with the basic tools necessary to understand a recent research article on, for instance, derivative theory or asset pricing. The course starts by introducing some basic ideas of probability theory, including some key ingredients of measure and integration theory. Subsequently, the definition of a random variable and the formal idea of stochastic independence will be discussed, together with the main properties of conditional expectations and martingales. The lectures will then cover some of the most important stochastic processes in finance, in dis-crete and continuous time, with a special focus on the Brownian motion process. The course ends with the definition and con-struction of the stochastic integral and with the proof of Itô´s formula for stochastic differentials.
Statistics
The course deals with statistical model-building and statistical inference. Examples, exercises and applications will be taken mostly from generalized linear models and time series analysis. Contents: main probability distributions employed in statistical modelling, likelihood concepts, parametric inference, an intro-duction to nonparametric inference, a survey of classical meth-ods in multivariate analysis.
Applied Statistics
The aim of this course is to review the main concepts of descrip-tive and basic inferential statistics and to deepen the knowledge of inferential methods for empirical research with application to economics, finance, management and marketing, both at a univariate and multivariate level.
The focus of the course will be mainly applied. Together with the theoretical concepts, data sets derived from empirical research, experimental data and questionnaires will be analysed.
The different steps of an empirical research will be analysed considering their statistical implications: definition of a sampling plan, preparation of a questionnaire, data collection, input, visualisation and processing; elaboration and analysis of the conclusions.
The free-ware statistical software “R” (free version of the com-mercial software “SPlus”, one of the main software used for statistical purposes) will be introduced.
Data, imported from an Excel spreadsheet into “R”, will be ana-lysed using both parametric and non-parametric procedures. In particular the statistical instruments needed to compare two or
more samples and to detect and analyse possible dependence links between two or more characters (both qualitative and quantitative) will be provided.
Accounting
This course in Accounting consists of two parts, the first part covering Financial Accounting and the second part covering Management Accounting. The main objective of the course is to provide a comprehensive overview of the functioning of financial and cost accounting with a particular focus on modern concepts in both fields. The course is of special interest for stu-dents who wish to pursue a career in an accounting department of an industrial corporation. Based on theoretical concepts, the course heavily incorporates practical aspects of cost and financial accounting in order to prepare students to cope with real-world events.
Capital Markets
This course analyses investment decisions. The stock and bond markets are discussed from the perspectives of the Efficient Market Hypothesis and Behavioural Finance. The main derivative contracts are introduced. Contents: portfolio analysis, efficient sets, index models, the CAPM: theory and empirical evidence, the APT, stock valuation, market efficiency and behavioural finance, performance measures, options, forward and futures, interest rates and term structure.
Corporate Finance
This course teaches the logic underlying the firm’s financial decisions: investment, financing, and payout policies. The main
themes will be: What is corporate finance? The concept of value, the discounted cash-flow (DCF) method in theory and practice, capital budgeting decisions, market efficiency and financial poli-cy, financial structure and the Modigliani-Miller theorem, payout policies: dividends and share repurchases.
Core Courses
Private Banking
The course deals with the topic of the role of financial institu-tions in the market for asset management services, with special emphasis on the business area known as private banking. The main focus of the course is on the content of the service, on the nature and management problems of the suppliers, and on the competitive structure of the market. Emphasis is placed more on the strategic and organisational issues of providing private banking services rather than on the techniques and models for managing a portfolio of securities.
Introduction to Financial Engineering
This course takes a look at the link between financial innovation and the causes and dynamics behind this process over the last 30 years. The course also presents the evolution of structured products, their use and markets. Lastly, through the use of simulations, the course provides a procedure to evaluate risk and return of complex portfolios.
Derivatives
This course analyses the main derivative contracts and their mar-kets. Futures, forwards, options and swaps are the main topics.
Numerical and analytical models for their valuation are presented and the empirical evidence is discussed. Contents: futures markets, forward and futures prices, interest rate futures, swaps, option markets, properties of option prices, trading strategies, binomial trees, the behaviour of stock prices, the Black-Scholes model, options on indices, currencies and futures, a general approach to pricing derivatives, market risk, numerical procedures.
Financial Statement Analysis
This course is about the analysis of financial information, par-ticularly the financial statements of companies, for making decisions to invest in businesses. The primary focus is on equity (share) valuation. Topics include models of shareholder value, a comparison of accrual accounting and discounted cash flow approaches to valuation, the analysis of profitability, growth and valuation generation in a firm, diagnosing accounting qual-ity, forecasting earnings and cash flows, pro-forma analysis for strategy and planning, and the determination of price/earnings and market-to-book ratios.
Financial Intermediation
The course will analyse theoretical and practical aspects of the modern theory of financial intermediation with a large use of author’s articles and practical session. The programme can be roughly partitioned in eight sessions. Contents: roles and insti-tutional constraints of financial intermediaries, financial decision making under uncertainty, the production approach to the bank-ing firm, the lender-borrower relationship, investment banks and primary markets, systemic risk, risk management in the banking industry, regulations.
Economics of Information
The course gives a theoretical outline for the analysis of commu-nication in the market and its influence on financial negotiation. Students analyse the value of information, its asymmetry and the effects caused by this. Applications include portfolio manage-ment and evaluation of performance in conditions of incomplete information.
Behavioural Finance
We start with a brief overview of the classical paradigms for decision under risk and the implications for portfolio selection and asset pricing. We then provide a description of market anomalies and market inefficiencies, and discuss the behavioural biases of real investors, as well as the implications for portfolio choices and asset pricing. We then study behavioural models for portfolio choice and behavioural asset pricing models, and finally apply these models in order to provide a behavioural explanation of asset pricing and asset allocation puzzles arising from the clas-sical finance theory.
Electives
Fixed Income
The course analyses the valuation and hedging of fixed-income securities in a stochastic environment and provides methods for optimally managing portfolios exposed to interest rate risk. After a brief overview of the basic concepts of fixed income markets, probabilistic models for the evolution of the term structure of interest rates will be considered in detail. Derivative securities pricing and immunisation schemes will then be analysed. In
addi-tion to theoretical explanaaddi-tions, the course provides real-world examples and applications throughout.
Ethics and Law in Banking
The course introduces students to some particular institutions of the common law system (Britain and the United States) such as trusts or fiduciary duties, as well as special aspects of contract law like frustration, anticipatory repudiation and consideration. Some of the topics covered include sources of banking law, legis-lation governing stock exchanges, due diligence and the guaran-tee of irreproachable business activity, banking secrecy, banking contracts, ethics, administrative issues (the role and competence of the Federal Banking Commission; procedural aspects; applica-tion of general principles), etc.
Structured Products
In an extensive interpretation, we may speak of structured prod-ucts as soon as we combine two or more elementary financial products into a new structure displaying original characteristics. Structured products represented one of the most rapidly grow-ing areas of finance in the last two decades, reachgrow-ing a nearly unlimited variety of forms. The goal of this course is to provide an overview of the general process of developing, marketing, and managing structured products as well as an introduction to the most popular among these products.
Advanced Corporate Finance
In the real world, mergers, acquisitions and restructuring are the most challenging applications for financial managers and invest-ment bankers. This course aims to bring together financial theory
and practice in order to develop the analytical skills needed in the field. The first part of the course deals with takeovers and mergers. The second part will focus on financial reorganisation and bankruptcy. A particular attention will be devoted to the conflicts of interest arising in such situations and to the implica-tions of the restructuring taking place under court protection (i.e. in a bankruptcy procedure) vs. out-of-court.
Corporate Banking
This course presents state-of-the art concepts of finance theory and applies them to practical corporate financing issues. The the-oretical part of the course will briefly review standard corporate financing theory, then move on to the concepts of asymmetric information and agency costs, and how they play into the practi-cal issue of raising long-term funds for a company. The applied part of the course will use case studies to bring together the major corporate finance concepts studied during the Master’s programme.
Risk Management
The main objective of this course is to introduce financial risk management, focusing on risk management methodologies for market and credit risk. The course starts with a general over-view of the typology of financial risks. We then discuss the risk management methodologies for market risk, modelling of risk factors, stress testing and risk measures. The next steps are: portfolio credit models, the modelling of default probabilities, recovery rates, and credit ratings. Finally, we introduce the regu-latory framework, in particular the Basel Accords.
Corporate Governance
Firms create value through their economic activity, and it is the performance of managerial investment and financing deci-sions that drives the creation of shareholder wealth. Corporate governance mechanisms have to provide proper incentives to ensure that the interests of the managers and the shareholders of the firm do not disagree. Governance mechanisms vary across nations, owing to the nature of their corresponding financial systems. This course provides a survey of these corporate gov-ernance problems and applies real-world cases in order to get a proper understanding of them.
Strategic Marketing
This course aims to develop the abilities to interpret different market situations and to conceive and implement appropriate responses. The focus of the course is on understanding the economic consequences of marketing decisions, and thus on the impact of various strategic choices in marketing, on the economic and financial performance of businesses. The main topic areas covered in this course are: the analysis of customer – supplier relationships and of market dynamics, the assessment of strategic marketing options, and the development and imple-mentation of market strategies. The course approach is based on the use of participative teaching methods, including a business game, and the analysis and discussion of company cases. Human Resources Management
This course discusses core issues of human resources manage-ment. The relationship between the parts of the employment relation is followed throughout its development. Examples of
topics discussed include investment in human capital, hiring decision, employee training, the design of compensation and incentive systems, and careers. The course pursues three specific objectives: (1) show the importance of human resources man-agement and personnel economics as fields of study, (2) explain the implications of the basic principles of labour economics for human resource management, and (3) apply the principles and techniques of economic analysis to the discussion of major per-sonnel issues and the solution of typical case problems. International Fiscal System
This course is about the ways in which tax law applies to trans-actions in the international context. The objective of this course is to introduce students to the EC rules relating to all forms of taxation as wella as to the rules that operate at an international or supra-national level. In addition to the anlysis of the features found in double tax conventions and in the law of the European Unionm there will be also an examination of financial instru-ments. This part of the course focuses on the models of taxation of financial income (including derivatives, hybrid instruments, investment funds etc.) and explores the treatment of financial income under tax treaties patterned upon the OECD Model Convention and European direct tax directives.
General Information
Language
This programme is entirely held in English. Admission Requirements
The formal requirement for admission is a Bachelor’s degree (or equivalent) from a recognised academic institution in Economics or related disciplines. Good knowledge of English is required. Contacts
Università della Svizzera italiana, USI Study Advisory Service
Tel. +41 58 666 4795 studyadvisor@lu.unisi.ch
