Economics of Banking (F)

Course content

The course covers two aspects of the topic, microeconomics of banking and risk management. In the microeconomics part, teaching starts with discussing key competences of banks, proceeds to fundamental aspects of banking such as the loan contract and credit rationing, discusses liquidity problems and bank runs, and ends up with a treatment of bank regulation involving the roles of central banks, deposit insurance and financial supervision authorities. In the risk management part, the course covers the basics of risk management in banks, measurement of risk, and then discusses the different types of risk occurring in banking, namely liquidity risk, interest rate risk, market risk, credit risk, and operational risk. For each of the risk types, the course covers the measurement of risk as well as methods for reducing risk.

 

Course Outline:

  • Introduction: Key competences of banks
  • Types of financial intermediation; basics of risk management
  • The loan contract; interest rate risk
  • Rationing in the credit market; market risk
  • Securitization and shadow banking
  • Credit risk
  • Payments and its impact on banking
  • Competition and risk taking
  • Irregularities in banking
  • Liquidity crises and bank runs; operational risk
  • Deposit insurance
  • Lenders of last resort
  • Reorganizing and closing banks
  • The Basel regulations
Education

MSc programme in Economics – elective course
The course is part of the Financial line at the MSc programme in Economics,   symbolized by ‘F’.

 

The PhD Programme in Economics at the Department of Economics - elective course with resarch module (PhD students must contact the study administration and the lecturer in order to write the research assignment)

Learning outcome

After completing the course the student is expected to be able to:

 

Knowledge:

  • Identify and assess the roles of banks in the financial sector, related to the basic problems of asymmetric information in its different forms.

  • Account for the basic principles of risk management and of risk measures, as well as the basic organisation of risk management in a bank.

  • Discuss the causes of bank runs and bank panics.

  • Define the different institutional setups designed for coping with bank runs.

 

Skill:

  • Master relevant theories and analyze problems related to financial intermediation.

  • Evaluate alternative methods for managing risk in banks.

  • Give suggestions for suitable regulation in the financial sector.

 

Competences:

  • Assess properties of credit markets, designing improvements of the contract structure,

  • Give advice for the regulation of financial intermediation and for the prevention of financial crises.

 

We use the textbook

H.Keiding, Economics of Banking, Palgrave-Macmillan 2015.

None otherwice than the formal requirements of the study.

Schedule:
2 hours lectures 1 to 2 times a week from week 6 to 20 (except holidays).

The overall schema for the Master can be seen at KUnet:
MSc in Economics => "courses and teaching" => "Planning and overview" => "Your timetable"
KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"

Timetable and venue:
To see the time and location of lectures please press the link/links under "Se skema" (See schedule) at the right side of this page (F means Spring).

You can find the similar information in English at
https:/​/​skema.ku.dk/​ku1920/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F20; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring – Week 5-30”
Press: “ View Timetable”

Written
Individual

 

Feedback will be given in connection with a voluntary written assignment during the semester.

ECTS
7,5 ECTS
Type of assessment
Written assignment, 3 hours
The exam assignment is given in English and must be answered in English.

The Board of Study has decided to change the exam to an online take-home exam, due to the Corona-crisis. The exam is still individual and you may not communicate with others about the exam assignment or solutions in any circumstances.
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Aid

With aids

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Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
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Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.

 

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Exam
  • 3
  • Preparation
  • 161
  • Lectures
  • 42
  • English
  • 206