| Learning objectives |
To achieve the grade 12, students
should meet the following learning objectives with no or only minor
mistakes or errors: The course introduces students to financial
intermediation with a main focus on banking. Upon completion of the
course the student should be able to:
- Explain the assets, liabilities and key sources of risk of some
main types of financial intermediaries, including banks, investment
banks, pension funds, mortgage institutions, and insurance
companies
- Explain the key roles performed by banks in an economy
including the role in the domestic and international payment
system, maturity transformation, screening and monitoring of
borrowers, and in the implementation of monetary policy
- Explain and discuss the composition and riskiness of bank
assets for a representative bank
- Explain different short-term and long-term funding sources of
banks, including deposits, interbank loans, repos, commercial
paper, medium term notes, covered bonds, contingent capital,
equity
- Understand a model for bank runs
- Explain deposit insurance and value deposit insurance in a
structural model of credit risk
- Explain the concept and importance of off-balance sheet
commitments
- Explain the rationale behind banking regulation and discuss
whether higher capital requirements affect bank lending. Explain
and discuss key concepts in financial regulation such as risk
weighted assets, capital ratios, the leverage ratio, net stable
funding ratio, liquidity coverage ratios
- Understand and apply the single factor portfolio credit risk
model
- Explain securitization and apply the single factor model to
pricing of tranches with different priority in asset
securitizations
- Understand the notion of systemic risk in the banking system
and discuss the regulation of systemically important banks
- Explain and discuss shadow banking
|
| Prerequisites for registering for the
exam |
|
Number of mandatory
activities: 2
Compulsory assignments
(assessed approved/not approved)
Two written assignments have to be passed before participating in
the final written report. A third assignment will be given if you
do not pass assignment 1 or 2. The assignments should be solved in
groups of 2-4 students. Maximum of 15 pages per group per
assignment.
|
| Examination |
|
Financial
Intermediation:
|
| Exam ECTS |
7,5 |
| Examination form |
Written sit-in exam |
| Individual or group exam |
Individual |
| Assignment type |
Written assignment |
| Duration |
4 hours |
| Grading scale |
7-step scale |
| Examiner(s) |
One internal examiner |
| Exam period |
Spring |
| Aids allowed to bring to the exam |
Limited aids, see the list below:
- Books and compendia brought by the examinee
- Allowed dictionaries
- Allowed calculators
- Notes in paper format brought by the examinee
- Additional allowed aids, please see the list
below
|
| Make-up exam/re-exam |
Same examination form as the ordinary exam
If the number of registered candidates for the make-up
examination/re-take examination warrants that it may most
appropriately be held as an oral examination, the programme office
will inform the students that the make-up examination/re-take
examination will be held as an oral examination instead.
If the number of registered
candidates for the make-up examination/re-take examination warrants
that it may most appropriately be held as an oral examination, the
programme office will inform the students that the make-up
examination/re-take examination will be held as an oral examination
instead.
|
|
| Course content and
structure |
|
The course develops a deep understanding of financial markets
and how investors use the securities traded in financial markets.
The course covers the following topics:
- Balance sheets and financial risks of financial
intermediaries
- The role of banks in the economy
- Bank funding
- Liquidity and credit risk management
- Bank regulation
- Systemic risk in the banking system
- Securitization, shadow banking
Excel is used throughout the course wherever
relevant
|
| Teaching methods |
| Lectures with written assignments.
Exercises are integrated into lectures |
| Student workload |
| Lectures |
33 hours |
| Preparation for lectures |
99 hours |
| Written assignments |
50 hours |
| Exam |
4 hours |
| Final preparation for exam |
20 hours |
|
| Expected literature |
- Frederic Mishkin: Economics of Money, Banking, and Financial
Markets, 10th Edition, 2012, Pearson
-
Peter Howellsand
Keith Bain:
The Economics of Money, Banking and Finance, 4th Edition,
Paperback, 2008, Pearson
- Stuart Greenbaum and Anjan Thakor: Contemporary Financial
Intermediation, 2nd edition, 2007, Academic Press
- Lecture notes by David Lando
- Annual reports and risk reports of major
banks
|
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