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Topics in Bank Management

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Announcements

Course Information

Syllabus (pdf)

This course is an introduction to the modern theory of banking and financial intermediation. Despite their long history and importance, banks do not easily fit into the models that economists typically use. We will examine different modeling approaches, with an emphasis on models based on asymmetric information. We will also study theories of financial instability and regulatory response to instability.

After taking this course, the student will be familiar with the models underlying modern research in financial intermediation; we will also read some recent papers to give a sense of the current research frontier.

Tentatively, there will be around 12 weeks of lectures. We will cover Chapters 1-5 and 7-8 in the textbook for the first 9 weeks; then, we will cover the topics "Debt vs. Equity" and "Alternatives to Banks for Financial Intermediation" for 2 weeks. I will hand out the readings for these topics later in the course.

In the last week, students will give a short (25 minute) presentation on a current research paper. I will provide a list later.

Course Outline

Textbook

The primary textbook is Microeconomics of Banking, 2nd ed. (2008) by Xavier Freixas and Jean-Charles Rochet, published by MIT Press.

Two useful pre-crisis survey articles on the theory of financial intermediation are:

Readings

Lecture Slides

Homeworks