Delivered at:: International College of Economics and Finance

Course type:: Elective course

When:: 2 year, 3 module

Instructor

Sokolov, Vladimir

Full Syllabus

Abstract

Banking is an optional course for the master level students at ICEF. The course runs in the second semester and is divided into parts. The first part of the course (part I) is applied banking. The second part of the course (part II) is empirical academic. The course starts with a review of the banks’ financial statements and definitions of concepts that will be used in the following lectures. Then it covers the main activities of banks – lending and attracting deposits. The issues of credit rationing and relationship banking that have received a lot of focus in academic literature will be highlighted. When covering the deposit attraction activities of banks, the concept of bank runs and liquidity risk will be reviewed. This motivates assessment of the popular regulatory policy implemented in many countries - deposit insurance. We will discuss studies that investigate the moral hazard and risk shifting problems that arise due to deposit insurance policies. The last several lectures are related to the very active debate on prudent regulation of the banking industry that gained a lot of attention following the recent financial crisis. The banking theories often provide contradictory answers to the following questions that are very important to the regulators: Does the policy of promoting higher competition among bank lead to banking sector stability? Do we need large or small banks? Do higher capital requirements imposed on banks lead to lower risk-taking by banks? What ownership structure leads to better corporate governance? The broad range of empirical papers that shed light on these questions will be discussed. In the end of the course each student will be present one academic paper on the issues covered in the course.

Learning Objectives

The banking course will cover the main concepts in banking as well as empirical contributions that have been recently published in the academic journals.
The chosen topics are also intended to advance the students’ understanding of the main regulatory debates regarding the role of the banking industry in the economy.

Expected Learning Outcomes

summarize and critically evaluate research in banking
carry out fundamental research in the field of banking and financial economics
solve analytical problems
interpret the results of banking models
solve professional problems
produce regulatory/policy documents

Course Contents

Part I. Applied Banking Lecture 1 – Introduction to bank analyses
Lecture 2 – Risk and Capital Management
Lecture 3 – Banks types and business models part 1
Lecture 4 – Banks types and business models part 2
Lecture 5 – Liquidity of banking system
Lecture 6 – Banking regulation
Part II. Banking empirics: Academic Lecture 1. Financial Intermediation and Depository Institutions
Lecture 2. Risks Faced by Banking Institutions
Lecture 3. Bank Lending
Lecture 4. Credit Rationing and Relationship Lending
Lecture 5. Bank Funding and Deposit Insurance
Lecture 6. Money Market Funding
Lecture 7. Liquidity Regulation
Lecture 8. Bank Capital and Capital Regulation
Lectures 9-10. Student’s presentations

Assessment Elements

exam
attendance part I
in-class performance part I
Class participation part II
Student presentations

Interim Assessment

2022/2023 3rd module
0.06 * Class participation part II + 0.62 * exam + 0.08 * in-class performance part I + 0.06 * attendance part I + 0.18 * Student presentations

Bibliography

Recommended Core Bibliography

Microeconometrics of banking : methods, applications, and results, Degryse, H., 2009

Recommended Additional Bibliography

Microeconomics of banking, Freixas, X., 1999
The economics of money, banking and financial markets, Mishkin, F. S., 2007

Master’s Programme 'Financial Economics'

Banking