Banking, bank regulation and risk management
Exam number: 6081
Semester: from 4th semester (Schwerpunktbildung)
Duration of the module: One semester
Form of the module (i.e. obligatory, elective etc.): Elective
Frequency of module offer: irregularly
Prerequisites: The students should be able to analyze macroeconomic shocks in the IS-LM-model and the AS-AD-model in a verbal, graphical, and formal way. The students should be able to master microeconomic concepts such as profit or utility maximization. Furthermore, the students should have some background in statistics and should be able to construct and interpret confidence intervals, hypotheses tests and univariate regressions. All courses from the „orientation phase“ should be completed.
Applicability of module for other study programmes:
Obligatory or elective in other study programmes. For further information check regulations of the study programme.
Person responsible for module: Prof. Dr. Georg Stadtmann
Name of the professor: Prof. Dr. Georg Stadtmann
Language of teaching: English
ECTS-Credits (based on the workload): 6
Workload and its composition (self-study, contact time):
Contact time (lecture, tutorials, seminar etc.) 33,75 h; self-study: 146,25 h
Contact hours (per week in semester): 3
Methods and duration of examination:
A complete submission of 1 group assignment on schedule (weight: 20 %).
A successful completion of the final exam (90 minutes, weight: 80 %).
The final grade results from the weighted average of the single graded parts.
Emphasis of the grade for the final grade: Please check regulations of the study programme
Aim of the module (expected learning outcomes and competencies to be acquired):
The purpose of the course is to introduce the students to some of the most widely used models in banking and bank regulation. The course introduces students to basic principal agent models. We will also review the foundations of bank regulation set by Diamond/Dybvig as well as Milgrom/Roberts.
In relation to the study program's qualification profile, the subject explicitly focuses on:
- Gain knowledge about a balance sheet of a bank and its main drivers.
- Gain knowledge about the risk in banking.
- Gain knowledge about bank regulation.
- Gain knowledge about recent drivers of the banking industry with respect to digitalization.
- Gain knowledge and skills with respect to game theory (backward induction) for solving sequential games.
- Students acquire the competence to manage work and master situations that are complex, unpredictable and require new solutions. This competence is practiced in a group assignment which should be solved in a group of 3-4 students. Group assignment trains the competence to initiate and implement research activities within a professional cooperation and take on professional responsibility. The results of the assignment are presented by one group of students to train the skills to present and communicate research based knowledge in a professional manner. Subsequent class discussions train the communication competencies of the group as well as their classmates.
- In order to strengthen the competencies to independently take responsibility for own professional development and specialization a written exam is also a part of the overall grade. This will also strengthen the skills to structure economic thinking and to communicate with professionals and non-specialists in a written form.
Contents of the module:
Lecture 1: Introduction: BankMasters
Lecture 2: The lender of the last resort: Diamond/Dybvig versus Milgrom/Roberts
Lecture 3: Principals and agents
Lecture 4: Micro versus macro prudential regulation
Lecture 5: Digitalization of the banking industry: Mobile payment systems
Lecture 6: tba
Lecture 7: tba
Nov. 8: 16 – 20: Review on Banking and Financial Crisis
Nov. 9: 09 – 13: Risk Management Basics
Nov. 22: 16 – 20: Basel III
Nov. 23: 09 – 13: Topics on Banking Regulation and Reporting
Teaching and learning methods:
Lectures and seminar, self-studies
Literature (compulsory reading, recommended literature):
Blanchard, Olivier; Giovanni Dell’Ariccia, and Paolo Mauro (2010): Rethinking Macroeconomic Policy, February 12, 2010, SPN/10/03
Diamond, D., D. Dybvig, Bank Runs, Deposit Insurance, and Liquidity, in: Journal of Political Economy, Vol. 91 (1983), S. 401–419.
Hull, John C. (2018): Risk Management and Financial Institutions, 5th ed., Wiley Finance Series, Hoboken New Jersey
Milgrom, Paul und John Roberts (1992), Economics, Organization and Management, Kapitel 6, Prentice Hall International.
Stadtmann: MobilePay versus Swip
Registration in Moodle Viadrina required.