IF3215 – Syllabus

Instructor:  Bülent Şenver
Instructor’s: Tel: ++ 90 212 296 7116  E-mail: bulentsenver@gmail.com

[expand title=”Course Objevtives” ]

Developments in financial markets force banks to expand their product range to include more sophisticated instruments and operations and accordingly more sophisticated risks as well. Therefore, banks’ profitability ratios, capital adequacy ratios and liquidity levels arethreatened by these risks more. Parallel to these developments, regulators search and develop new regulations (such as Basel II) in order to better supervise and assure a sound banking system. With this respect, it becomes vital for banks to manage the risks encountered and to operate in line with regulations. Within this framework the students will be provided with; (1) the nature of banking, (2) risks such as; credit risk, interest rate risk, foreign exchange rate risk, liquidity risk and operations risk, cohesive with the balance sheet of banks, (3) a detailed analysis of related mentioned risks, (4) the process of managing these risks and (5) the related regulations.


[expand title=”The Scope of the Course” ]

Economic problems in many countries and the aggressive growth targets of banks resulted in financial crises. As a result of this, reductions in profit margins will be witnessed in the banking industry. Therefore, it is expected that the only way that banks can protect their profit margins against the harms of banking risks is to develop an efficient risk management process and culture. Within risk-return framework, students will be provided information on the relationship between risk, profitability and capital adequacy. Duration analysis, gap analysis and hedging strategies will be provided to students.


[expand title=”Teaching Style” ]

The nature of banking, the definition and the management process of risks, regulations and other subjects will be lectured at the classroom. The lectures will be supported with cases and analyses.

A guest speaker from the banking industry will be invited to the class. A bank visit will be made to a big bank in Turkey to get more information about risk management from the bank executives.


[expand title=”Course Policies/Ethical Conduct” ]

  1. Students are recommended to attend to class lectures.
  2. Participation to class discussions are encouraged.
  3. One class will be made at the bank’s head office building and general manager of the bank will address the students on banking risks. Participation to this Bank Visit is recommended.
  4. Project Paper will show the students’ research, analysis and evaluation skills and should be conducted by the student to reflect his/her team work and creativity.
  5. Students should comply with the principles included in the University Students’ EthicsCode during the course.


[expand title=”Required Text” ]

Course Notes: see www.bseducation.net


[expand title=”Artickles” ]

  1. Bierwag, G.O. and Kaufman, G.G., 1977, Coping with the Risk of Interest Rate Fluctuations: A Note, Journal of Business, V.50, P.364-370.
  2. Bierwag, G.O., Kaufman, G.G. and Khang, C., November 1978, Duration and Bond Portfolio Analysis: An Overview, Journal of Financial and Quantitative Analysis, V.13, P.671-681.
  3. Bierwag, G.O., Kaufman, G.G. and Toevs, A., 1983, Immunization Strategies for Funding Multiple Liabilities, Journal of Financial and Quantitative Analysis, V.18, N.1, P.113-124.
  4. Bierwag, G.O., Corrado, C.J. and Kaufman, G.G.,1992, Durations  for Portfolios of Bonds Priced on Different Term Structures, Journal of Banking and Finance, V.16, P.705-714.
  5. Binder, B.F., December 1980, Asset/Liability Management Part 2: Management and Control of Rate Sensitivity, Magazine of Bank Administration, V.56, P.31-35.
  6. Clifford, J.T., March 1975, A Perspective on ALM: Part 1, Magazine of Bank Administration, V.51, P.16-21.
  7. Clifford, J.T., April 1975, A Perspective on ALM, Part 2: Rate/Mix Analysis, Magazine of Bank Administration, V.52, P.32-36.


[expand title=”Text Books” ]

  1. Bessis, J., 1998, Risk Management in Banking, First Edition, John Wiley & Sons, West Sussex, England.
  2. Glavin, W.M., 1982, Asset-Liability Management: A Handbook for Commercial Banks, Bank Administration Institute, Rolling Meadows, Illinois, U.S.A
  3. Hempel, G.H., and Simonson, D.G., 1998, Bank Management: Text and Cases, Fifth Edition, John Wiley and Sons Inc., U.S.A.
  4. Rose, P.S. and Hudgins, S.C., 2010, Bank Management and Financial Services, McGraw Hill- Irwin, USA.
  5. Saunders, A. and Cornett, M.M., 2011, Financial Institutions Management: A Risk Management Approach, McGraw Hill-Irwin, USA.
  6. Sinkey, J.F.Jr., 1989, Commercial Bank Financial Management in the Financial Services Industry, Third Edition, MacMillan Publishing Company, U.S.A..
  7. Stigum, M.L. and Branch, R.O., 1983, Managing Bank Assets and Liabilities; Strategies for Risk Control and Profit, First Edition, Dow Jones-Irwin, U.S.A..


[expand title=”Other Recommended Readings” ]

Special reading assignments will be published in www.bseducation.net


[expand title=”Important Websites” ]

Bank for International Settlements:


All works and regulations of Basel Committee which is an internationally recognised organisation are published in this site. The site is incredibly rich as including very detailed information on risk management and reporting to regulators.

Banking Regulation and Supervision Organisation:


All information on bank regulations in Turkey can be reached at this site.


[expand title=”Assessment” ]

Assessment is based on a mid-term exam (30%), project paper presentation (20%) and a final exam (50%).


[expand title=”Course Outline” ]

  • Why are Banks as Financial Intermediaries special?
  • Bank Financial Statements and Bank Performance
  • Introduction to Banking Risks and Bank Risk Management Process
  • Banking Risks Control and Monitoring Techniques
  • The Effect of Banking Risks to Capital Adequacy of Banks
  • CAMELS-O Banking Risks Methodology
  • Basel I, II and III Banking Risks
  • Managing the different types of Interest Risks
  • How to deal with the different types of Liquidity Risks?
  • Credit Risk Management Principles, Policies and Procedures
  • How to Manage the Different Types of Foreign Exchange Risks
  • How Banks Control Their Technology and Operations Risks?
  • Banks’ Off Balance Sheet Risks Types and Control Techniques
  • Sovereign and Country Risks in Banking
  • How to Manage Reputation Risk in Banks?
  • Risk Hedging Techniques, Futures, Forwards, Options, Caps, Floors, collars and Swaps
  • Audit of Banking Risks
  • Ethical Issues in Handling Banking Risks
  • Future of Banking Risks