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Unit information: Banking in 2016/17

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Unit name Banking
Unit code EFIMM0006
Credit points 15
Level of study M/7
Teaching block(s) Teaching Block 2 (weeks 13 - 24)
Unit director Dr. Fabiana Gomez
Open unit status Not open
Pre-requisites

None

Co-requisites

None

School/department School of Accounting and Finance
Faculty Faculty of Social Sciences and Law

Description

The objective of the course is to understand the role of banks in the economy and the sources of fragility of the banking sector. It begins by introducing the main functions of banks in the economy. This is followed by the study of the economic literature about the existence of financial intermediaries. Then, the causes of financial crises are analyzed: financial panics, bubbles, contagion and endogenous risk. Next, the course focuses on the Subprime crisis to analyze its causes and consequences. The course ends with an analysis of banking regulation.

Intended learning outcomes

On the completion of this module students should be able to: - understand the fundamentals of financial intermediaries - recognize the main sources of fragility of the banking sector - understand economic problems behind bank runs, bubbles, financial contagion and endogenous risk - identify the market failures leading to the Subprime Crisis - analyze the problems with Basel Prudential Accords.

Teaching details

Lectures and workshops.

Assessment Details

All the learning outcomes specified above will be assessed by a 3-hour written exam (80%) and by an oral presentation of 15 minutes (20%). In the presentation students will be asked to relate the Subprime Crisis to one of the source of banking fragilities studied in the course. The presentation will be done in groups of four students.

Reading and References

Freixas, X and Rochet J-C, “Microeconomics of Banking”, MIT Press, second edition Allen, F and Gale, D, “Understanding Financial Crises”, Oxford University Press, 2007 Dewatripont, M., Rochet, J-C. and Tirole, J., “Balancing the Banks:Global Lessons from the Financial Crisis”, Princeton University Press, 2010.

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