Activity 1 Research on the different types of financial intermediaries, their roles and their respective sizes (total assets). Compare across three PICs.

Activity 2 Research on the different types of financial regulations in any PIC. What are the reasons for these regulations? Who implements these regulations? Hint: Explore for material on any PIC Central Bank website (see slide # 54 for link to Fiji financial sector regulation doc). If you are from any other PIC, you are encouraged to share your findings for your own PIC. The many different PICs that you cover, the broader will be your understanding on financial regulation in the PICs.

Activity 3

Refer to the ADB article on financial crisis https//www.adb.org/publications/global-financial-crisis-impact-asia-and-emerging-consensus (link provided ). This paper reviews the impact of the global economic crisis on Asia and the policy measures introduced by various countries to mitigate the impact. The role of the ADB in fostering recovery in the developing countries is discussed. Lessons learned and new insights are elaborated on as well. 5 economies are covered. Select any one from these 5 countries. Discuss the impact of the crisis on your chosen economy, summarize the policy measures implemented, and discuss the outcomes. You will need to focus on pages 1 to 9 for this activity. The objective is to see how an event analysis on a macroeconomy is conducted. Next, go to page 11 section IV. Lessons learned. Read through and briefly list down the main lessons learnt.

Additional Practice questions

Q1: Analyze the impact of a business cycle expansion on the interest rate using (i) the bond market model and (ii) the liquidity preference model You must clearly show the initial points and the impacts.

Q2: Differentiate between risk structure of interest rates and terms structure of interest rates.

Q3. Use the bond market model to illustrate and explain how differences in default risk result in interest rate differences on bonds with same years to maturity.

Q4. Use the bond market model to illustrate and explain how differences in liquidity of bond results in interest rate differences on bonds.

Q5. Use the bond market model to illustrate and explain how differences in income tax policy on income earned from investment in bonds results in interest rate differences on bonds. Assume one bond has a preferable income tax policy.