The lectures are scheduled over 15 weeks, with two hours each Monday 10-12 and two hours Thursday 13-15 in even-numbered weeks, all in 35-3-12. A plan for the teaching and an overview of the topics covered is given below (of course subject to minor changes as we proceed). First lecture is Monday, February 5th.
The course covers two distinct, but closely related, topics, namely microeconomics of banking, which deals with the role of banks in the economy and the economic aspects of the relations between a bank and its customers, and risk management in banks, a more technical part where we look at the tools used to control the risks in a bank.
We use the textbook:
Keiding, H., Economics of Banking, Palgrave Macmillan 2016
Since things move fast in the financial sector, there will occasionally be need for some supplements to the text. This will be indicated on the homepage.
We
skip some sections (and a full chapter) as can be seen from the plan
below.
For each lecture there will be a handout (click on the lecture number below) appearing a week's time before. It briefly describes what happens in this week, indicating what can be skipped in the text and what is important. There will be two voluntary assignments in the course of the semester, and it is recommended to do deliver these assignments.
Plan of
lectures
| Lecture (week number) |
Handouts | Microeconomics of banking | Risk management in banks | We read: | Solutions
to Exercises in the textbook |
Notes |
| 1 (6) |
Lecture 1 Slides |
Why banks: The Diamond-Dybvig model of liquidity insurance | Chapter 1 (beginning) |
Exercises in Chapter 1 |
Corrections to examples
in Chapter 1 |
|
| 2 (6) |
Lecture 2 Slides |
Why banks, continued: Delegated monitoring,
adverse selection, moral hazard |
Rest of Chapter 1 (except sec.5) |
Exercises
in Chapter 2 |
||
| 3 (7) |
Lecture 3 Slides |
Relationship banking Shadow banking I |
Risk management, basics |
Chapter 2, selected parts. Chapter 3, beginning. |
Exercises
in Chapter 3 |
|
| 4 (8) |
Lecture 4 Slides |
Risk management,
interest rate risk |
Chapter 3, remaining
parts |
|||
| 5 (8) |
Lecture 5 Slides |
The loan contract |
|
Chapter 5 (First parts) |
Exercises
in Chapter 5 |
|
| 6 (9) |
Lecture 6 Slides |
The loan contract, cont., Credit rationing |
Chapter 5 (remaining parts) Chapter 6 (first parts) |
|||
| 7 (10) |
Lecture 7 Slides |
Credit rationing, continued |
Chapter 6 (remaining parts) Chapter 4 |
Exercises
in Chapter 6 |
||
| 8 (10) |
Lecture 8 Slides |
Securitization |
Market risk |
Chapter 8 |
Exercises in Chapter 4 |
|
| First
voluntary assignment
Hints for answers |
||||||
| 9 (11) |
Lecture 9 Slides |
Shadow banking II |
|
Chapter 8, remaining parts |
Exercises
in Chapter 8 |
Note on shadow banking |
|
10 (12) |
Lecture 10 Slides |
Payments | Credit risk | Chapter
7, Chapter 10, sec.3 |
Exercises in Chapter 7 |
Note on payments |
| 11 (12) |
Lecture 11 Slides |
Cryptocurrencies, Islamic Banking, Competition among banks |
Chapter 9, sec.6 Chapter 10, sect 4 Chapter 11, sec.1-3 |
Exercises in Chapter10 |
Note on Blockchain | |
| 12 (13) |
Lecture 12 Slides |
Competition and risk taking |
Chapter
11 (except sec.4.2,5.2,5.3) |
Exercises in Chapter 11 | ||
|
13 (14) |
Lecture 13 Slides |
Irregularities in banking | |
Chapter 12 |
Exercises in Chapter 12 |
|
| 14 (15) |
Lecture 14 Slides |
Liquidity
crises and bank runs Interbank market |
Operational
risk Liquidity risk |
Chapter
13 Chapter 14 |
Exercises
in Chapter 13 Exercises in Chapter 14 |
|
| 15 (16) |
Lecture 15 Slides |
Financial contagion Shadow banking III, Deposit insurance |
Chapter 14 Chapter 15 |
|
||
| 16 (16) |
Lecture 16 Slides |
Deposit insurance, continued |
|
Chapter 15 |
Exercises
in Chapter 15 |
|
| Second voluntary assignment | ||||||
| 17 (17) |
Lecture 17 Slides |
Lenders of last resort |
|
Chapter
16 |
Exercises
in Chapter 16 |
Correction |
| 18 (18) |
Lecture 18 Slides |
Regulation
of banks |
|
Chapter 17 | Exercises in Chapter 17 | |
| 19 (18) |
Lecture 19 |
Systemic impact Capital regulation |
Chapter 18 |
Exercises in Chapter 18 | Payments and contagion | |
| 20 (19) |
Lecture 20 |
Overview |
|
Concluding remarks | ||
| 21 (20) |
Questions |
|
||||
| Ordinary
exam: 28.5.2024 Reexam: 20.8.2024 | ||||||
| Previous exams |
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Latest update: 24.4.2024