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The current and official versions of the course specifications are available on the web at //www.usq.edu.au/course/specification/current.
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FIN2108 Credit Analysis and Lending Management

Semester 2, 2015 On-campus Springfield
Units : 1
Faculty or Section : Faculty of Business, Education, Law and Arts
School or Department : School of Commerce

Contents on this page

Staffing

Examiner: David Troedson
Moderator: Frank Elston

Requisites

Pre-requisite: FIN1101

Other requisites

Students are required to have access to a personal computer, e-mail capabilities and Internet access to UConnect. Current details of computer requirements can be found at //www.usq.edu.au/current-students/support/computing/hardware.

Rationale

Lending constitutes one of the most important functions of any financial institution. In a typical bank, around 70% of funds are invested in loans and advances. As we have seen with the global financial crisis, if the lending function is not managed properly, it can lead to serious credit quality issues that can have a destabilising effect on individual lenders and ultimately on the financial system. To manage the lending function properly, and to mitigate credit quality problems, adequately trained staff are required. The goal of this course is to equip students with requisite skills toward this end.

Synopsis

Business firms extend credit, banks extend loans. The focus of this course is credit analysis and lending. It provides an overview of lending principles, covers analytical aspects such as the financial analysis of a firm to determine credit worthiness, provides an overview of policy and legal issues, and looks at special types of credits like consumer loans, real estate loans, corporate loans and international loans. It also covers related topics such as securitisation, portfolio management and problem loan management.

Objectives

On successful completion of this course, students should be able to:

  1. outline the basic aspects of lending and the principles of good lending
  2. explain the rationale for credit scoring models and discuss their development and application
  3. define and discuss credit risk and explain its measurement and control in relation to individuals, businesses and portfolios
  4. outline and discuss the various issues/loan types/techniques/statistics pertaining to consumer, real estate, corporate, small business and international lending
  5. describe the legal framework that governs consumer and real estate lending, and outline legal factors that are specific to bankers
  6. provide an overview of problem loan management: causal factors, remedial actions, statistics etc
  7. apply the tools of credit analysis and lending management to solve problems faced by banks in assessing loans and managing loan portfolios
  8. confidently and coherently communicate the results of a financial statement analysis to an appropriate audience
  9. demonstrate the information literacy skills required of a financial services professional, especially with regard to reading and interpreting financial statement information.

Topics

Description Weighting(%)
1. The principals of lending and lending basics 8.00
2. Financial statements analysis 10.00
3. Credit scoring techniques 8.00
4. Credit risk 1 9.00
5. Credit risk 2 9.00
6. Consumer lending 8.00
7. Real estate lending 8.00
8. Security, consumer credit legislation and legal aspects of lending 8.00
9. Corporate lending 8.00
10. Small business lending 8.00
11. International lending 8.00
12. Problem loan management 8.00

Text and materials required to be purchased or accessed

ALL textbooks and materials available to be purchased can be sourced from USQ's Online Bookshop (unless otherwise stated). (https://bookshop.usq.edu.au/bookweb/subject.cgi?year=2015&sem=02&subject1=FIN2108)

Please contact us for alternative purchase options from USQ Bookshop. (https://bookshop.usq.edu.au/contact/)

  • Koch, T, MacDonald, S, Edwards, V & Randall, E 2014, Bank management: a decision making perspective, Cengage Learning, Singapore.
  • Sathye, M, Bartle, J & Boffey, R 2013, Credit analysis and lending management, 3rd edn, Tilde University Press, Melbourne, Victoria.
  • The text by Koch et. al is also used in FIN3109 Managing Financial Institutions.

Reference materials

Reference materials are materials that, if accessed by students, may improve their knowledge and understanding of the material in the course and enrich their learning experience.
  • Hull, JC 2010, Risk management and financial institutions, 2nd edn, Pearson Prentice Hall, Boston, Massachusetts.
  • Hunt, B & Terry, C 2011, Financial institutions and markets, 6th edn, Cengage Learning, South Melbourne, Victoria.
  • Martin, RD 2008, Banking and finance: in principle, Lawbook Co, Pyrmont, New South Wales.
  • Tyree, AL 2011, Banking law in Australia, 7th edn, LexisNexis Butterworths, Chatswood, New South Wales.

Student workload requirements

Activity Hours
Assessments 20.00
Directed Study 36.00
Private Study 109.00

Assessment details

Description Marks out of Wtg (%) Due Date Notes
ASSIGNMENT 25 25 28 Aug 2015 (see note 1)
QUIZZES 15 15 30 Oct 2015 (see note 2)
EXAM PART A (MULTI-CHOICE) 30 30 End S2 (see note 3)
EXAM PART B (WRITTEN) 30 30 End S2

NOTES
  1. Your assignment includes assessing the credit worthiness of a business by applying financial techniques including ratio analysis and summarising your results.
  2. Three online quizzes will be conducted during the semester. Further details will be provided on the course Study Desk.
  3. The total working time for the examination (parts A and B) is 2 hours. The examination date will be available via UConnect when the official examination timetable has been released.

Important assessment information

  1. Attendance requirements:
    External/Online: If you are an international student in Australia, you are advised to attend all classes at your campus. For all other students, there are no attendance requirements for this course. However, it is the students' responsibility to study all material provided to them or required to be accessed by them to maximise their chance of meeting the objectives of the course and to be informed of course-related activities and administration.

    On-campus: It is the students' responsibility to attend and participate appropriately in all activities (such as lectures, tutorials, laboratories and practical work) scheduled for them, and to study all material provided to them or required to be accessed by them to maximise their chance of meeting the objectives of the course and to be informed of course-related activities and administration.

  2. Requirements for students to complete each assessment item satisfactorily:
    To satisfactorily complete an individual assessment item a student must achieve at least 50% of the marks. (Depending upon the requirements in Statement 4 below, students may not have to satisfactorily complete each assessment item to receive a passing grade in this course.)

  3. Penalties for late submission of required work:
    Students should refer to the Assessment Procedure http://policy.usq.edu.au/documents.php?id=14749PL (point 4.2.4)

  4. Requirements for student to be awarded a passing grade in the course:
    To be assured of receiving a passing grade a student must achieve at least 50% of the total weighted marks available for the course.

  5. Method used to combine assessment results to attain final grade:
    The final grades for students will be assigned on the basis of the aggregate of the weighted marks obtained for each of the summative assessment items in the course.

  6. Examination information:
    This is a restricted examination. Candidates are allowed access to specific materials during the examination. The only materials that candidates may use in the examination for this course are:
    1. writing materials (non-electronic and free from material which could give the student an unfair advantage in the examination)
    2. calculators which cannot hold textual information (students must indicate on their examination paper the make and model of any calculator(s) they use during the examination).
    Students are not permitted to take mobile telephones, pagers or other electronic means of communication into the examination room.

  7. Examination period when Deferred/Supplementary examinations will be held:
    Any Deferred or Supplementary examinations for this course will be held during the next examination period.

  8. University Student Policies:
    Students should read the USQ policies: Definitions, Assessment and Student Academic Misconduct to avoid actions which might contravene University policies and practices. These policies can be found at http://policy.usq.edu.au.

Assessment notes

  1. Referencing in assignments:
    Harvard (AGPS) is the referencing system required in this course. Students should use Harvard (AGPS) style in their assignments to format details of the information sources they have cited in their work. The Harvard (AGPS) style to be used is defined by the USQ Library's referencing guide at //www.usq.edu.au/library/referencing.