| 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, funding in foreign currency, FX swaps
- Understand a model for bank runs
- Use a structural (Merton) model of credit risk to value debt
and equity and use the model flexibly to analyze deposit insurance,
risk taking incentives, etc.
- Explain the concept and importance of off-balance sheet
commitments .Explain and discuss shadow banking
- 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
- Understand the tools of monetary policy applied by central
banks and how they operate through the banking
system
|
| 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.
Both assignments cannot be re-examined within the same semester.
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 on CBS'
computers |
| Individual or group exam |
Individual exam |
| Assignment type |
Written assignment |
| Duration |
4 hours |
| Grading scale |
7-step scale |
| Examiner(s) |
One internal examiner |
| Exam period |
Spring |
| Aids |
Limited aids, see the list below:
The student is allowed to bring - USB key for uploading of notes, books and compendiums in a
non-executable format (no applications, application fragments, IT
tools etc.)
- Any calculator
- Books (including translation dictionaries), compendiums and
notes in paper format
The student will have access to - Access to the personal drive (S-drive) on CBS´ network
- Advanced IT application package
At all written
sit-in exams the student has access to the basic IT application
package (Microsoft Office (minus Excel), digital pen and paper,
7-zip file manager, Adobe Acrobat, Texlive, VLC player, Windows
Media Player). PLEASE NOTE: Students are not allowed to communicate
with others during the exam :
Read more about exam aids and IT application
packages here |
| 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.
|
|
| 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
- Central banks and monetary policy instruments
Excel is used throughout the course wherever
relevant
|
| Teaching methods |
| Lectures with written assignments. Exercises are
integrated into lectures |
| Feedback during the teaching period |
| Feedback is given on both homework
assignments. |
| 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 |
- Selected academic papers, including central bank
publications
- Lecture notes by David Lando
- Annual reports and risk reports of major
banks
|
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