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Financial Intermediation

Main objectives

This course provides an introduction into topical issues in the field of banking and finance. It aims at building a bridge between theoretical and methodological knowledge acquired in the first years to real world markets and applications. Current topics of interest include financial crises and the role of banks. Why do markets fail and how can prudential regulation improve their performance and resilience?

The course also serves as the basis for more advanced research, which may take the form of a bachelor thesis or even continued studies in form of subsequent master program in finance. Certain topics would lend themselves easily to bachelor theses in the general field of banking and finance.

Course outline

  • Introduction
  • The role of financial intermediaries
  • The industrial organization approach to banking
  • Bank bias in Europe: effects on growth
  •  Case Studies

o   Microcredit

o   Separation between commercial banking and investment banking

  • Information problems in banking

o   Creditworthiness tests and (contractual) screening

o   The lender-borrower relationship: contracts and enforcement

o   Management compensation and risk choice

  • Equilibrium in the credit market and its macroeconomic implications
  • Individual bank runs and systemic risk: a rationale for prudential regulation

o   Lender of last resort

o   Capital regulation

o   Financial supervision

  • Bank bias in Europe: effects on systemic risk
  • Case studies of banking systems in distress

Course cycle

Each winter term

Literature

Beatriz Armendariz, Jonathan Morduch, The Economics of Microfinance, 2nd ed., MIT Press: Cambridge, MA, London, Engl., 2010.

Charles Calomiris and Gary Gorton: The Origins of Banking Panics: Models, Facts and Bank Regulation, in Glenn Hubbard (ed.): Financial Markets and Financial Crises, University of Chicago Press, January 1991.

Thomas Gehrig: "Capital, confiance et compétitivité dans le secteur bancaire", Revue d`Economie Financière 112 (Les systèmes bancaires européens (2)), 2013, 175-193.

Thomas Gehrig: Changing Business Models in Banking and Systemic Risk, in H. Albach, H. Meffert, A. Pinkwart, H. Reichwald (Hrsg): Management of Permanent Change in Firms and Markets, Springer-Gabler, 2015.

Xavier Freixas, Jean-Charles Rochet, Microeconomics of Banking, 2nd ed., MIT Press: Cambridge, MA, London, Engl., 2008.

Charles Kindleberger: Manias, Panics, Crashes, A History of Financial Crises, NY, Basic Books, 1978.

Sam Langfield, Marco Pagano, Bank Bias in Europe: Effects on Systemic Risk and Growth, ECB Working Paper 1797, May 2015.

Frederic S. Mishkin, The Economics of Money, Banking and Financial Markets, Business School Edition, 3rd ed., Pearson: Harlow, Engl., 2012.

Harold D. Skipper, W. Jean Kwon, Risk Management and Insurance: Perspectives in a Global Economy, Blackwell Publishing: Malden, MA, Oxford, Engl., Victoria, Australia, 2007.

John Vickers, Some Economics of Banking Reform, Department of Economics Discussion Paper Series 632, University of Oxford, November 2012.

Institut für Finanzwirtschaft
Fakultät für Wirtschaftswissenschaften
Universität Wien

Oskar-Morgenstern-Platz 1
1090 Wien
T: +43-1-4277-38262
F: +43-1-4277-838262
Universität Wien | Universitätsring 1 | 1010 Wien | T +43-1-4277-0