Course

Banking

Teacher(s)

Enrico Perotti, Xinyi Wang, Spyridon Terovitis
Research field

Finance, Accounting and Finance
Dates

Period 1 - Sep 04, 2023 to Oct 27, 2023

Course type

Field
Program year

Second
Credits

3

Course description

The course reviews the literature on financial intermediation and is relevant for students interested in finance, macroeconomics, and governance. It combines a classic contractual approach with recent work on system-wide risk creation. Drawing from the lesson of the crisis, it focuses on the risk transformation role of banks and shadow banks and the sources of endogenous credit cycles and instability. A key goal is to offer foundations for micro and macro-prudential policy reform, drawing from models of opportunism, risk externalities, or behavioral biases. Topics include debt optimality, moral hazard in risk choices, financial externalities, maturity and liquidity risk transformation, endogenous risk, induced runs, demand for safety, and their implications for capital and liquidity regulation.

Prerequisites

Recommended: Contract Theory, Corporate Finance

Course literature

Primary reading
- Selected papers.