Banking Systems. Role of the Central Bank

2021/2022

Учебный год

ENG

Обучение ведется на английском языке

4

Кредиты

Кто читает:

Департамент мировой экономики

Статус:

Курс по выбору

Когда читается:

3-й курс, 1, 2 модуль

Преподаватели

Джагитян Эдуард Павлович

Савина Ольга Денисовна

Course Syllabus

Abstract

This program aims at training the undergraduate students so that they are well prepared for professional problem solving in the banking industry. Upon the successful completion of the program, students will acquire profound knowledge in international banking and will be confident when delving into the complex mechanisms of international banking regulation and financial stability. Students will also benefit from understanding of what is the effective and efficient international financial intermediation, including that brought by the systemically important financial institutions (SIFIs); how the processes of mergers and acquisitions (M&A) in the banking industry are run; and how the entire banking systems are transformed. They will also explore their understanding of risks in the international banking activity. Besides, the students will be in the know with role of the central bank in tailoring and fine-tuning the contemporary concept of the banking sector and the integrity of the national and regional economic systems. Upon the successful completion of this program, students will: • know the specifics of the development, operations, and transformation of banks and banking systems; • understand factors underlying the structure of banks and banking systems, as well as the international banking activity; • understand the urgency and inevitability of international regulation of banks and the banking sector; • possess skills required for the holistic view over banking risks, including those relevant to the M&A processes in the banking industry; • understand the role and specifics of the central bank for banking and financial sectors, its importance for financial stability, and how it manages sustainable economic growth.

Learning Objectives

• To give students a holistic, updated, and unbiased understanding of how the international banking system works, why banks and banking systems are critical in shaping dynamics of the world economy, how the international financial markets depend on size and interconnectedness of larger banks, and how and the extent to which the international financial intermediation contributes to post-crisis recovery and financial stability
• To provide students with the contemporary processes in international banking activity, make them understand the risks the internationally active banks face in their day-to-day activity and how those risks are managed and mitigated
• To make students be cognizant with the specifics of systemically important financial institutions, complexity of their organizational structure and performance, the extent of their stress resilience to adverse externalities, and their effect on systemic stability amid the asymmetries of international financial markets and the processes of financial globalization and regionalization
• To make students delve into the insights of central banking and the role of central banks in maintaining the well-being of banks and banking systems despite the challenges associated with sophisticated operating models of the banks and their increasing interconnectedness amid uncertainties and volatility of macro level dynamics
• To focus students’ attention on various foci of the post-crisis reform of banking regulation and prudential banking supervision (a.k.a. Basel III), including institutional aspects of the reform, together with the issues of whether the banks are able to bring back their power as driving forces of economic development and sustainable economic growth

Expected Learning Outcomes

• analyze the key driving forces underlying the activity of, and differences in, international and multinational banks; know the specifics of the internationalization process of the banking activities amid the challenges of the contemporary economic environment.
• know the objectives and driving forces of banking M&A, why banks need M&A and how banking M&A shapes the banking systems landscape, as well as the benefits and risks of the consolidation processes.
• know the specifics of banking regulation and how it ensures stress resilience of the banking sector and financial stability; understand Basel III and how macroprudential policy contributes to the integrity of the post-crisis international regulatory order.
• possess the hands-on approach in dealing with when, why, and how banking systems transform and the extent to which they benefit from financial integration.
• understand and be able to analyze various factors underlying risks associated with the international banking activity, as well as the tools and techniques applicable to the efficient risk mitigation approaches in the framework of risk management in banks.
• understand the background and organization (structure) of banking systems, including core differences between the banking systems of the developed and developing economies; be able to make out the advantages and risks of interconnectedness of the financial institutions and its criticality on current developments of international banking activity and financial globalization.
• understand what is bank, what are the differences between bank and non-bank financial company , what is the bank’s role in the economy and its economic specifics, as well as types of banks and perspectives of digitalization in the banking industry.
• understand when the central banks apply the known instruments of the monetary policy, and how the central banks mitigate crisis developments, deal with the post-crisis recovery, and ensure financial stability.

Course Contents

• What are banks and what are they for?
• Banking systems
• Multinational and international banks
• Transformation of banking systems
• Banking risks
• Mergers and acquisitions (M&A) of banks
• Central bank as an economic institution
• International banking regulation

Assessment Elements

• Seminars
• Control work 1
  The control work (CW-1) is based on the Socrative platform (https://www.socrative.com/). Students must be online 15 minutes before the CW-1 starts. The student’s computer must meet the following requirements: https://elearning.hse.ru/data/2020/05/07/1544135594/Технические%20требования%20к%20ПК%20студента.pdf) To participate in the CW-1, the student should conduct a system test. During the control work students are prohibited from any form of communication (by using social networks or with somebody else in the room). In case the student was unable to pass the CW-1 during the scheduled time due to interruption in internet connection, they CANNOT retake the CW-1.
• Control work 2
  The control work (CW-2) is based on the Socrative platform (https://www.socrative.com/). Students must be online 15 minutes before the CW-2 starts. The student’s computer must meet the following requirements: https://elearning.hse.ru/data/2020/05/07/1544135594/Технические%20требования%20к%20ПК%20студента.pdf) To participate in the CW-2, the student should conduct a system test. During the control work students are prohibited from any form of communication (by using social networks or with somebody else in the room). In case the student was unable to pass the CW-2 during the scheduled time due to interruption in internet connection, they CANNOT retake the CW-2.
• Essay
  In case the student fails to submit an essay within the period stipulated by the Program, the student receives “0” (fail) grade for the essay, and the final grade (GF) is re-calculated based on the following formula: GF = 0,24*GS + 0,14*GCW1 + 0,24*GCW2 + 0,29*GE + 0,09*GA where GS is the grade for the seminars, GCW1 and GCW2 are the grades for the control work 1 (CW-1) and control work 2 (CW-2) accordingly, GE is the grade for the essay, and GA is the grade for class attendance. At the same time, the grades for each element of the final grade are re-calculated and rounded to the nearest smallest whole number, regardless of the decimal digit. The final grade for the ICFR discipline is rounded in the same way. For example, a grade of 7.9 is rounded to 7.
• Class attendance
• Exam (for those graded 0-3 for the Program)
  This is an oral exam based on the Webinar platform (https://webinar.ru/). Students must be online 15 minutes before the exam starts. The student’s computer must meet the following requirements: https://elearning.hse.ru/data/2020/05/07/1544135594/Технические%20требования%20к%20ПК%20студента.pdf) To participate in the exam, the student should conduct a system test, turn on the camera and microphone, and confirm his/her identity. During the exam students are prohibited from any form of communication (by using social networks or with somebody else in the room), cheating, and using the internet. During the exam students are allowed to use calculator. An up to 1 (one) minute interruption in communication is considered as a short-term following which students may continue the exam. Interruption in communication of 1 (one) minute and more is considered as a long-term, following which students cannot continue their participation in the exam. Retaking the exam is similar to the exam as above.

Interim Assessment

• 2021/2022 2nd module
  0.25 * Essay + 0.1 * Class attendance + 0.15 * Control work 1 + 0.25 * Control work 2 + 0.25 * Seminars

Bibliography

Recommended Core Bibliography

• Ata Can Bertay, Asli Demirgüç-Kunt, & Harry Huizinga. (2019). Are international banks different? Evidence on bank performance and strategy. BIS Working Papers. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.bis.biswps.790
• Bostwick, E. D. (2019). The Little Bank That Could: An Examination of the Historical and Financial Records of One Bank That Survived the Great Depression. Accounting Historians Journal, 46(2), 17–31. https://doi.org/10.2308/aahj-52528
• Chawla, O. P. (2019). Evolution of Banking System in India Since 1900. New Delhi, India: Sage Publications Pvt. Ltd. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2169021
• Chey, H. (2014). International Harmonization of Financial Regulation? : The Politics of Global Diffusion of the Basel Capital Accord. New York: Routledge. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=685067
• Di Vittorio, F., Li, D., & Yun, H. (2018). On Bank Consolidation in a Currency Union. [N.p.]: INTERNATIONAL MONETARY FUND. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1812105
• Elements of financial risk management, Christoffersen, P. F., 2012
• Felix I. Lessambo. (2019). The U.S. Banking System : Laws, Regulations, and Risk Management (Vol. 1st ed. 2020). Cham: Palgrave Macmillan. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2334751
• Ferber, T. V. aut. (2016). European banking regulation after the financial crisis : franco-german conflict of interest during the negotiations on a single resolution fund / Tim Ferber. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edswao&AN=edswao.483038393
• Gambacorta, L., van Rixtel, A., & Schiaffi, S. (2019). Changing Business Models in International Bank Funding. Economic Inquiry, 57(2), 1038–1055. https://doi.org/10.1111/ecin.12738
• Ghosh, A. (2012). Managing Risks in Commercial and Retail Banking. Hoboken: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=435168
• Herger, N. (2019). Understanding Central Banks. Cham, Switzerland: Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2030954
• King, B. (2019). Bank 4.0 : Banking Everywhere, Never at a Bank. Chichester, West Sussex, United Kingdom: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1995220
• Lóránth, G., & Morrison, A. (2018). The corporate structure of multinational banks. CEPR Discussion Papers. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.cpr.ceprdp.12688
• Multinational banks and the global financial crisis: Weathering the perfect storm? (2014). Journal of Money, Credit and Banking, 46(SUPPL.1), 333–364. https://doi.org/10.1111/jmcb.12094
• Quigley, E. (2018). Bank. Dublin, Ireland: Little Island Books. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1823626
• Regular Banking System versus Shadow Banking System. A Comparative Assessment of Evidence from Romania. (2019). https://doi.org/10.26458/jedep.v8i4.650
• Risk management and financial institutions, Hull, J. C., 2015
• Risk management in banking, Bessis, J., 2015
• Roxana Bădîrcea, Alina Manta, Ramona Pîrvu, & Nicoleta Florea. (2016). Banking Integration in European Context. Amfiteatru Economic, (42), 317. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsdoj&AN=edsdoj.6eeed79ae173470cbb8d3a06737e911e
• Tognato, C. (2012). Central Bank Independence : Cultural Codes and Symbolic Performance (Vol. 1st ed). New York: Palgrave Macmillan. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=521530
• Warjiyo, P., & Juhro, S. M. (2019). Central Bank Policy : Theory and Practice (Vol. First edition). Bingley: Emerald Publishing Limited. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2026184
• Went, P., Donohue, C., Apostolik, R., & Global Association of Risk Professionals. (2009). Foundations of Banking Risk : An Overview of Banking, Banking Risks, and Risk-Based Banking Regulation. Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=835736
• Williams, G. (2019). The Evolution of China’s Banking System, 1993–2017. Abingdon, Oxon: Routledge. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1840309
• Yondo Belle, S. (Serge). (2016). Effects of mergers & acquisitions on financial performance of USA acquiror banks. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsndl&AN=edsndl.oai.union.ndltd.org.oulo.fi.oai.oulu.fi.nbnfioulu-201606072440

Recommended Additional Bibliography

• Aleksandr, B. (2019). Influence of Modern Financial Technologies on the Institutional Structure of the Russian Banking System. Vestnik Universiteta, (9), 143–148. https://doi.org/10.26425/1816-4277-2019-9-143-148
• Alexis Derviz, & Jiří Podpiera. (2011). Lending behavior of multinational bank affiliates. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.A4D3D81C
• ALINA LIGIA DUMITRESCU. (2014). The Banking Union – the Solution to Reduce the European Banking System Risks? Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.D1561E91
• Amiti, M., McGuire, P., & Weinstein, D. E. (2019). International Bank Flows and the Global Financial Cycle. IMF Economic Review, 67(1), 61–108. https://doi.org/10.1057/s41308-018-0072-6
• Cochrane, J. H., Palermo, K., Taylor, J. B., & Auclert, A. (2019). Currencies, Capital, and Central Bank Balances. Stanford, California: Hoover Institution Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2037242
• Diemer, M. (2016). Who should rescue subsidiaries of multinational banks? Journal of Financial Stability, (C), 159. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.eee.finsta.v26y2016icp159.174
• Donaldson, J., & Flagg, D. (2014). Using Derivatives to Hedge Interest Rate Risk: A Student Exercise. Research in Higher Education Journal, 24. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=eric&AN=EJ1064089
• Frey, R., & Düwel, C. (2013). Competition between foreign affiliates: Multinational banks internal funding in the crisis. Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.zbw.vfsc13.80013
• GARA, A., VARDI, N., & KAUFLIN, J. (2019). Fintech’s Secret Bank: The Forbes Investigation. Forbes, 202(10), 126–134. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=bsu&AN=140351033
• Hadir H. Shubbar, & Andrey V. Guirinsky. (2019). Contents and principles of stability of the banking system. RUDN Journal of Economics, (1), 63. https://doi.org/10.22363/2313-2329-2019-27-1-63-71
• Hans, C. (2017). Systemic risk in the banking sector: a network perspective. Universitat Pompeu Fabra, 2017. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edstdx&AN=edstdx.10803.420878
• Har Wai-Mun, Lee Teck-Heang, & Tam Cai-Lian. (2011). Readiness of ASEAN Banking Sector Integration: Recent Development and Statistical Evidence. IUP Journal of Monetary Economics, 9(1), 46–65. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=bsu&AN=59337828
• Knaack, P. V. (DE-588)1101844108, (DE-576)470004916, aut. (2017). An unlikely champion of global finance : why is China exceeding international banking standards? / Peter Knaack. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edswao&AN=edswao.495652792
• Liu, K. (2019). Chinese Shadow Banking: The Case of Trust Funds. Journal of Economic Issues (Taylor & Francis Ltd), 53(4), 1070–1087. https://doi.org/10.1080/00213624.2019.1668338
• Rafał, S. (2013). Remarks on the Transformation of the Polish Banking System by the Reforms After 1989. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.2FA0861E
• Ramlall, I. (2016). Central Bank Ratings : A New Methodology for Global Excellence. Basingstoke, Hampshire: Palgrave Pivot. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1231425
• Selgin, G. A., Bédard, M., & Dowd, K. (2017). Financial Stability Without Central Banks. London: London Publishing Partnership. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1679978
• Yin-Pheng Lim, P., Khong, R. W. L., & Hui-Boon Tan. (2015). Bank Integration and Systemic Risk: Panacea or Pandemic? Journal of Developing Areas, 49(4), 301–312. https://doi.org/10.1353/jda.2015.0141