module specification

FS5001 - Bank Lending and the Legal Environment (2017/18)

Module specification Module approved to run in 2017/18
Module title Bank Lending and the Legal Environment
Module level Intermediate (05)
Credit rating for module 30
School Guildhall School of Business and Law
Total study hours 300
81 hours Scheduled learning & teaching activities
219 hours Guided independent study
Assessment components
Type Weighting Qualifying mark Description
Group Presentation 30%   Group presentation - 10 minutes
In-Course Test 20%   In-Class Test - 1 hour
Unseen Examination 50%   Unseen examination 2 hours
Running in 2017/18
Period Campus Day Time Module Leader
Year City Monday Afternoon

Module summary

The module develops knowledge and understanding of English Law as it applies to the banker-customer relationship and credit analysis in different customer segments.  It provides the theoretical and practical framework for understanding the relationship between the principles of bank lending and the principles of law in the UK.

Module aims

This module aims to develop:
1.  an awareness and understanding of the principles of English Law as it applies to the banker-customer relationship
2.  an awareness and understanding of the Consumer Credit and Data Protection Acts and the main legal features relating to Trusts and the taking of Security
3.  the ability to evaluate the principles of bank lending and their practical application over a wide range of lending situations
4.  skills in credit analysis in different customer segments
5.  an awareness of ethical issues in relation to bank lending
6.  a supportive environment for the development and application of lending and legal skills
7. the skills of analysis, critique,  academic writing, oral communication and group work


The legal environment
The Law relating to the Banker-Customer relationship.
The Consumer Credit Acts.
The Data Protection Acts
Constructive Trusts
Common forms of security taken by banks.

Bank lending
Bank lending and the regulatory environment; principles of credit risk management
The credit granting process: credit evaluation; credit scoring; credit rating agencies
Types of bank finance; loan pricing
Types of security; evaluation of security
Personal lending: overdrafts; loans and mortgages; credit cards
Small business lending: approach, appraisal and control
Corporate lending
Working capital finance: cash operating cycle; cash  forecasts and budgets
Long-term finance: capital gearing and operating gearing
Monitoring, control and follow-up: loan review procedures; overtrading and overcapitalisation
controlling loan losses; loan securitisation; debt restructuring; debt write-off 
Alternative forms of financing: leasing and hire purchase, factoring, invoice discounting
Ethical issues in bank lending: fraud, misrepresentation, misselling, money laundering, monopoly power

Learning and teaching

This module will explore the theoretical, practical and legal aspects of bank lending and provide a supportive learning environment for students to develop generic academic and employability skills introduced in level 4 modules.

Delivery will be based on a mixture of lectures and seminar activities.

The lectures will deliver the core academic and theoretical content. They will include the use of video and interactive teaching approaches. These will be supported by the seminar classes which will use problem- based learning approaches to develop student knowledge understanding.   The Activities Week events will also support both the academic content and the skills development.      

There will be a two-hour lecture each week supported by directed reading and other media such as videos. Interactive teaching approaches will be adopted and students will be encouraged to participate in small group exercises during the class. Student contributions within lectures will be encouraged.

The will be a one-hour seminar that will utilise a variety of teaching tools will including group activities, presentations, discussion, quizzes. The seminars will develop student confidence in the subject discipline and generic skills such as group work, oral communication, numeracy and critical an analytical skills. Students will be required to prepare materials for the seminars based on the lecture themes of the previous weeks.  
Students will be expected to devote at least seven hours per week undertaking independent reading and study.  The University’s virtual learning platform which will be used to provide supporting class materials, cited web sources and discussion forums.

The module will help students analyse their future career opportunities in banks and other financial services organisations in managerial and advisory capacities.  Personal Development Planning (PDP) and reflection skills will be practiced through periodic reflective exercises.

Learning outcomes

On successful completion of the module students, will be able to:

1. demonstrate an understanding and appreciation of the importance of the many legal relationships governing the Bank and the Customer.
2. discuss the intention and object of these legal principles as they apply to the banking and finance environments.
3. evaluate the principles of bank lending and apply these to a range of lending situations
4. appraise alternative forms of bank finance 
5. evaluate ethical issues that may arise in the process of bank lending
6. demonstrate critical and analytical thinking in writing and orally
7. contribute effectively in a group based exercises    

Assessment strategy

Diagnostic and formative assessment will take place on a weekly basis in seminars to develop theoretical, analytical and oral and written communication skills.

By Week 2, students will be given a formative assessment task to be submitted in Week 4. In Week 4, students will be required to submit the formative assignment that they received in Week 2.

Formative and summative assessment will take place with presentations in weeks 8-10 Students will be required to undertake a group research activity using Bloomberg as well as academic journals, culminating in a presentation on a stipulated topic in relation to any one bank.  The presentations will be 10 minutes in duration with approximately 2-4 minutes allocated for each individual student, and will be undertaken during the class hours.

Summative assessment will take place with a one-hour In-Class Test in week 15. This assessment will test students’ knowledge and understanding and ability to undertake numeric exercises to evaluate bank lending decisions.

Summative assessment will take place between weeks 29 to 30 with a 2-hour unseen written examination which will test student’s knowledge and understanding of the module content and assess written communication


Cranston, R. (2008) ‘Principles of Banking Law’ 3rd Ed, Oxford University Press, Oxford
Ellinger, E. P., Lomnicka, E. And Hooley, R. (2005) ‘Ellinger's Modern Banking Law’ Oxford University Press, Oxford. Fight, A., (2004) ‘Credit Risk Management’ Elsevier Butterworth-Heinemann Oxford
Lee, N. (2008) Principles of Lending, ifs School of Finance, Canterbury
Roberts, G. (2007) ‘Law Relating to Financial Services’ 6th Ed., Financial World Series Institute of Financial Services Global Professional Publishing
Rouse, N (2008) 'Bankers' Lending Techniques', Financial World Publishing, Canterbury
Saunders, A & Allen, L (2002) ‘Credit Risk Measurement’, 2nd  John Wiley & Sons Inc. New York

Academic Journal Articles (accessible electronically)
DeAngelo, H., DeAngelo, L. and Wruck, K. H. (2002) 'Asset liquidity, debt covenants, and managerial discretion in financial distress: the collapse of L.A. Gear', Journal of Financial Economics, 64, 3-34.
Houston, J. F., Lin, C. And Ma, Y. (2011) ‘Media ownership, concentration and corruption in bank lending’ Journal of Financial Economics 100 2 May 2011, 326-350
Malhotra, R., and Malhotra, D., (2003) ‘Evaluating consumer loans using neural networks’, The International Journal of Management Science, 31:83-96
Niinimäki, J. P. (2009) ‘Does collateral fuel moral hazard in banking?’ Journal of Banking & Finance, 33, 3, 514-521

Professional Journal Articles
White, L. (2010) ‘Wrong on ratings’, Financial World, December 2009/January 2010

Bank for International Settlements (2000) Principles for the Management of Credit Risk, Basel Committee on Banking Supervision, Basel