| 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 - Business School |
| Faculty | Faculty of Social Sciences and Law |
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.
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.
Lectures and workshops.
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.
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.
