| Learning objectives |
The course introduces students to financial
intermediation with a main focus on banking:
- 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 simplified version of the Diamond-Dybvig
model
- 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 and apply the mixed binomial
model.
- Discuss cost of capital for banks and capital allocation within
banks.
- Understand the tools of monetary policy applied by central
banks and how they operate through the banking system. Discuss
payment systems and settlement,Introduce the market for
Eurodollars..
|
| Prerequisites for registering for the exam
(activities during the teaching period) |
|
Number of compulsory
activities which must be approved (see section 13 of the Programme
Regulations): 2
Compulsory home
assignments
The student must get 2 out of 4 written home assignments approved
in order to attend the
ordinary exam. The assignments should be solved in groups of 2-4
students. Maximum of 3 pages per student per assignment.
Students will not have extra opportunities to get the required
number of compulsory activities approved prior to the ordinary
exam. If a student has not received approval of the required number
of compulsory activities or has been ill, the student cannot
participate in the ordinary exam.
If a student prior to the retake is still missing approval for the
required number of compulsory activities and meets the
pre-conditions set out in the program regulations, an extra
assignment is possible.
The extra assignment is a 10 page home assignment that will cover
the required number of compulsory activities. If approved, the
student will be able to attend retake.
|
| 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-point grading 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
- In Paper format: Books (including translation dictionaries),
compendiums and notes
The student will have access to - Access to Canvas
- Access to the personal drive (S-drive) on CBS´ network
- Advanced IT application package
|
| Make-up exam/re-exam |
Same examination form as the ordinary exam
The number of registered candidates for the make-up
examination/re-take examination may warrant that it most
appropriately be held as an oral examination. The programme office
will inform the students if the make-up examination/re-take
examination instead is held as an oral examination including a
second examiner or external
examiner.
|
|
| Course content, structure and pedagogical
approach |
|
The course develops a deep understanding of banking. The course
covers the following topics:
- Balance sheets and financial risks of banks
- The role of banks in the economy
- Bank funding
- Bank risk management
- Banking regulation
- Systemic risk in the banking system
- Securitization, shadow banking
- Central banks, payment systems, and monetary policy
instruments
- Benchmark rates
Excel is used throughout the course wherever
relevant
|
| Description of the teaching methods |
| Lectures with written assignments. Exercise
sessions are offered, Some exercises may be integrated into
lectures. |
| Feedback during the teaching period |
| Feedback is given on homework assignment. In
addition, we have five exercise sessions in which the students do
problems and have a dialogue with the instructor whenever they
‘stumble’ or are stuck. Students get immediate response to a
proposed method or approach. Quizzes will be added after each
lecture.. |
| Student workload |
| Lectures |
33 hours |
| Preparation for lectures |
66 hours |
| Written assignments |
40 hours |
| Exam |
4 hours |
| Final preparation for exam |
18 hours |
| Exercise sessions |
10 hours |
| Preparation for exercise sessions |
35 hours |
|
| Expected literature |
- Selected academic papers, including central bank
publications
- Lecture notes by David Lando
- Annual reports and risk reports of major
banks
|
Permalink