ECON42015: MONEY AND BANKING

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• introduce students to Brokerage and Qualitative Assets transformations functions of the commercial banks
• discuss the tools and good practices that can help mitigate moral hazard and adverse selection in credit markets
• build up understanding of liquidity risks and credit risks and the instruments of risk management
• give students a sound knowledge of the transmission mechanism of monetary policy via traditional channels, the balance sheet channel, and the bank lending channel
• introduce students to various arguments that motivate banking regulation and discuss case studies on recent regulatory developments
• discuss theories and evidence on the relationship between financial development and economic growth

• Topics may include:
• Contract design that mitigates the problems of asymmetric information
• Liquidity and credit risks and their management
• Deposit expansion multiplier and money supply
• Banking Regulation: Theories and Evidence
• Risk, competition, and efficiency in banking
• Financial Crises: Theories and Evidence
• Financial Development and Economic Growth

Subject-specific Knowledge:

• Understanding the mechanism through which financial development promotes economic growth.
• Understanding the links between the banking industry and the transmission of monetary policy.
• Be familiar with core arguments that motivate the regulation of the banking industry and current regulatory landscape.
• Ability to critically assess the implications of bank globalisation.
• Ability to explain recent episodes of financial crises using theoretical arguments and empirical evidence.

Subject-specific Skills:

• Ability to apply core advanced banking theory to applied topics in financial intermediation
• Ability to identify appropriate solutions to problems associated with the instability of the banking industry
• Ability to justify conclusions using theoretical arguments with appropriate rigour

Key Skills:

• Ability to show understanding of advanced analytical methods
• Ability to reason logically and work analytically
• Ability to work with abstract concepts and in a context of generality
• Ability to understand the contexts in which problems are addressed
• Ability to communicate effectively and clearly in written and oral formats

• A combination of lectures, seminars and guided reading will contribute to achieving the aims and learning outcomes of this module. Summative assessment by written examination will test students' knowledge and understanding of the subject-matter and their ability to apply relevant problem-solving and analytical skills.

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