Aims

To introduce students to the study of banks in a modern society. To develop students’ understanding of the role of banks as financial intermediaries from microeconomic as well as macroeconomic perspectives.

Outline Of Syllabus

The course begins with the development of the basic concepts used in contemporary banking theory, especially informational problems associated with financial contracts. Two major functions of banks, monitoring borrowers and providing liquidity insurance, are studied in this context. Applications of the theory to, e.g., the fragility of banks, to banking regulation and to the role of banks for the economy are then considered.

Teaching Rationale And Relationship

Lectures provide an in-depth presentation of theoretical models and required techniques, as well as guidance on how to apply the analysis to real-world economic situations.

Seminars provide opportunities to go into greater depth through exercisers and discussion.

Independent study involves following up reading list references and practicing analytical skills.

Assessment Rationale And Relationship

The written unseen exam is an appropriate way to provide evidence of students’ ability to explain advanced concepts and models used in contemporary banking theory and to apply them to real world problems.