School of Business Administration April 3, 2013
-Systematic Studies of Current Developments in the Finansial Sector-
With financial terms such as "Big Bang," "European monetary union," "Asian currency crisis," "electronic money," and "derivatives" constantly in the headlines, a knowledge of finance is essential today, not only throughout the business world, but in everyday life. Finance, or the movement of funds, is often likened to the bloodstream of the economy; a stable circulation sustains the health of the whole system. This course aims to provide a firm grounding in the theoretical, international, and historical aspects of finance, and, based thereon, to develop an informed understanding of finance-related sectors such as banking, insurance, and securities, together with the ability to address practical and strategic areas such as risk management and micro-finance.
Keywords: money supply, interest rate, central bank, money market, prices
What is money? How are interest rates decided? How does a central bank's control of the money supply via the money market affect economic activity, employment, and inflation? The effectiveness of monetary policy and its transmission mechanism are discussed. Trends in the Japanese financial market, now in the midst of a "Big Bang," are also noted.
Keywords: international monetary system, key currency, capital movement
Basic theories of international finance, including the relationship between the international balance of payments and exchange rates, and the mechanism by which the latter are determined, are first explained. These theories then form the basis for a discussion of the evolution and present state of the international monetary system, together with historical and policy-related aspects of international finance, such as the roles of the IMF and World Bank. Contemporary problems facing the international financial system, such as the Asian currency crisis, European monetary union, and the advent of electronic money, are also noted.
Keywords: modernization, central bank, commercial bank, investment bank, international financial center
The role played by the financial system in economic growth and the evolution of business since the beginning of the modern era are discussed in terms of international comparative history, with particular reference to Britain, France, Germany, and Japan. The process by which the international financial center moved from Amsterdam, where it was located in early modern times, to London and then New York are also discussed in the context of the history of international relations, together with the role of investment banks and the actual movements of capital during the process.
Keywords: banking system, bank management, financial innovation
The basic functions and role of banks, the structure of financial institutions in various nations of the world, and the changing nature of banking business are briefly explained. Other banking topics including future management strategies, risk management, the increasing role of information technology, internationalization, and securitization are also discussed, with the emphasis on practical aspects.
Keywords: modern insurance, insurance technology, stability and efficiency of the market, asymmetry of information, user protection
This course gives an overview of the insurance industry, presented in the following order: insurance systems, the history of insurance, insurance markets, insurance financing, the insurance industry in a welfare society. The goal is to explore the essential character of modern insurance, viewed from the perspective of the industry's response to the challenges it faces today, and also to explore the potential for reform of the Japanese insurance industry while envisioning the future of the welfare society.
Keywords: bond, stock, corporate financing, direct financing
Securities such as corporate bonds and stocks are traded on securities markets; these can be divided into issue markets, where they are initially offered, and secondary markets, where they are subsequently bought and sold. The dealers who mediate between issuers and investors aim to ensure that these markets operate smoothly. The course discusses such topics as the types of securities markets and their functions, and the relationship between securities markets and corporate financing.
Keywords: risk, crisis management, perception of risk (or security), Japanese-style management
The purpose of this course is to learn the general principles and methods of risk management, using concrete examples. The meaning of "Japanese-style management" and the sociocultural factors underlying the Japanese perception of risk are also discussed in relation to crisis management. Examples will be taken from current events, covering such areas as corporate crime and employee misconduct, finance-related incidents (mortgage-backed securities, variable-rate insurance, etc.), natural disasters, accidents involving fires or explosions, and product liability cases.
Keywords: financial asset, price formation, asset management, portfolio
Companies and households hold their savings in the form of financial assets of various types. The combination of securities held is called a portfolio, and the optimum combination is determined by an analytic approach known as portfolio theory. This course discusses the price formation of financial assets and asset management, centered on portfolio theory.
Keywords: insurance, insured group, level premium, liability reserve, risk selection
Understanding life insurance requires a broad approach that encompasses many disciplines, including risk management, law, economics, business administration, finance, actuarial principles, accounting, social security, and history. This course introduces the basic concepts of the main elements involved in this approach; its aim is to develop the ability to use life insurance wisely, together with informed judgment concerning a number of related issues.
Keywords: moral hazard, adverse selection, degree of risk avoidance, law of large numbers, loss compensation
First, the relationships among various risk management tools are explained using elementary micro-economics. Specifically, as tools other than non-life insurance, self-insurance and loss prevention are examined, and the conditions under which they complement commercial non-life insurance are considered. Next, it is shown that cultural factors determine which modes of using non-life insurance have high leverage effects in a particular country.
Keywords: settlement of trade accounts, exchange rate, international balance of payments
The settlement of trade accounts depends on foreign exchange. The yen-dollar rate is a familiar example of an exchange rate; its fluctuations greatly influence trade and the international balance of payments. While the International Finance course emphasizes institutional and policy-related aspects, this course places more emphasis on theory and actual business practice.
Keywords: securities transaction, commodity transaction, exchange, Big Bang, derivative
Traditionally, securities such as corporate bonds and stocks were traded on securities exchanges, and commodities suited to high-volume trading, such as textiles or foodstuffs, were traded on commodities exchanges. Recently, however, there has been growth of new forms of trading which do not require an exchange, e.g., over-the-counter derivatives and proprietary trading systems. The course discusses these changes in the exchange system and the present state of exchange business, among other topics.