University of Bamenda Professional Degree
First Semester Examination January 2025
Department: BANKING AND FINANCE
Course Title: COMPARATIVE FINANCIAL SYSTEMS
Course Code:
Credit Value:
Semester: First Semester
Time allowed: 2:30 MINS
Course Status: Compulsory
Exam Date:
Course Instructor: Dr. ATINGWA N, SET 1
Total Marks: 70 Marks
MARKING GUIDE Set 1
COURSE TITLE : COMPARATIVE BANKING
COURSE CODE : BKF320
___________________________________________________________________________
_______
Question 1
a) - To address the problem banking panics
- To serve as a central bank for the United States
- To manage the nation’s money supply through monetary policies to achieve
maximum employment and price stability.
- To main the stability of the financial system and contain systemic risk in financial
market.
- To provide financial services to depository institutions.
- To strengthen the United States standing in the world economy. (15 mks for any 5
points)
b) i) Open market operations - buying and selling of US government securities
ii) Discount rate – the interest rate for discount window lending, and overnight loans
to member banks.
iii) Reserve requirements – the required reserve ratio sets the balance that the Federal
Reserve System requires in depository institutions to hold in the Federal Reserve Bank. The
required reserve ratio is set by the board of governors of the Federal Reserve systems.
(6mks)
C) - Transmission of monetary policy
- Denomination intermediation.
- Maturity intermediation
- Economies of scale
- Transaction cost (9mks)
___________________________________________________________________________
_______
Question 2
(a) Use the flow diagram to show how funds move from the surplus unit (household) to the
deficit unit (manufacturing companies and the government). Either passing through financial
intermediaries such as banks, institutional investors such as mutual funds, pension funds, and
insurance companies or markets such as money, bonds, stocks and derivatives. (Well
illustrated diagram = 12 mks)
(b) The direct financing channel is financing through financing through financial
intermediaries and institutional investors which is more liquid than indirect financing which
is financing through markets such as the money and capital markets which are less liquid.
(8 mks)
___________________________________________________________________________
_______
Question 3
(a) i) No financial leakages
ii) Adequate regulations
iii) Well-established and functioning markets
iv) The system should have a currency of its own
v) The system should be technologically adaptable
vi) Limited government intervention in the financial system (2 x 5 points = 10
mks)
(b) i) Information efficiency
ii) Allocation efficiency
iii) Operational efficiency
vi) Price efficiency
v) Diversification in terms of deposit (2 x 5 points = 10
mks)
___________________________________________________________________________
_______
Question 4
(a) - The state owns and controls resources
- Economic plannification
-Welfare maximization
-The central planning agency allocate resources
- Collective price target (8 mks)
(b) Advantages
Competition leads to efficiency
A production of variety of goods and services
Increase standards of living
Absence of strategies and surpluses
Improvement in technology and innovation
Disadvantages
Inadequate production of public and merit goods
Wide gap between the rich and the poor
Price instability
Monopoly power
Social cost (12 mks)
___________________________________________________________________________
_______
Question 5
___________________________________________________________________________
_______
Question 5
a) - In a conventional banking system money is a product while in the Islamic system
money is just a medium of exchange
- In the conventional system time value is the basis of charging interest on capital while
in the Islamic system profit on goods and services is the basis of earning profit
- In a conventional system no sharing of loses while there is a sharing of loses in the
Islamic system
- The conventional system is subjected to inflation when expansion of money takes
place but this is not the case with the Islamic system(4pts = 10 mks)
b) - Open market operations
- Minimum lending rate
- Funding
- Cash and liquidity ratio
- Reserved requirements (4 pts = 10mks)
SECTION B: ESSAY QUESTIONS OR MCQ OR STRUCTURAL (30 Marks)
