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Unit information: Introduction to the microeconomic foundations of banking in 2018/19

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Unit name Introduction to the microeconomic foundations of banking
Unit code EFIMM0051
Credit points 15
Level of study M/7
Teaching block(s) Teaching Block 1 (weeks 1 - 12)
Unit director Dr. Tobias Dieler
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 this module is to familiarize students with the banking industry and provide them with the analytical skills to critically assess banking from both a regulator’s perspective and a banker’s perspective. This is achieved by covering the following topics both descriptively and theoretically: How is a bank different from a real firm?; What are the different types of banking?; Which services do banks provide to its customers and to the economy as a whole?; The role of information in banking.; What is the role of central banks?; How can banks be regulated to maximize social welfare?; What is the risk/negative externality of an insolvent bank?

Intended learning outcomes

On completion of this unit students should be able to:

  1. Demonstrate a comprehension of principal features of the banking industry;
  2. Demonstrate a critical awareness of the role of banks for different stakeholders and the economy as whole;
  3. Critically reflect on and discuss the role of the government, regulation, and government interventions into financial systems;
  4. Use the analytical tools provided by information economics to critically assess past and upcoming institutional features in the banking industry.

Teaching details

Teaching takes place in a combination of lectures and tutorials. The 15 hours of lectures will take place in a traditional lecture setting, all efforts will be made to ensure lectures are as engaging and interactive as possible with the active use of student questioning, and student participation. Complementary to the lectures there are five one hour tutorials which are intended to provide students with a forum in which they can further their understanding. Lecture notes, assignments and sample solutions to assignments will be available online.

Assessment Details

Summative assessment

(1) 50 % Group assignments. Over the course of the unit, students will be given five assignments of three analytical exercises each to work on in groups of 2-3 students. The assignments will draw on the description of institutional features of the banking industry and theory from the lectures. The objective is to enable students to use the theory introduced in lectures to apply them to the most common and latest phenomena in banking (ILO1 -4). On each assignment, the group receives one mark which is valid for all students of the group.

(2) 50 % Closed book exam (1.5 hours).

The exam will be similar in format to the assignments. It will be a cross section of themes covered in the assignments (ILO1-4). The purpose of the exam is solely to evaluate the individual student’s performance which is difficult to ascertain from group assignments.

Formative assessment

The formative assessment is integrated with the summative assessment. While working on the assignments students are in permanent exchange with each other and with the teachers. Due to the five assignments over the course of the unit, students receive continuous feedback on their understanding of the material and their aptitude to critically assess institutions in banking.

For all group assignments students will be able to select their group members. Appropriate and detailed protocols will be put in place for selecting groups, efficient group work, time management in a group, allocation of responsibilities, and ensuring equality of contribution and about support for group work. There will also be rules for disputes among group work.

Reading and References

The course is based on two textbooks: 1) “Introduction to Banking” (2015) by Casu, Girardone and Molyneux. Pearson. and 2) “Microeconomics of Banking” (2008) by Freixas and Rochet. MIT Press

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