Università Cattolica del Sacro Cuore
Area of Study
Taught In English
Students are supposed to master the standard analytical tools learned in an undergraduate microeconomics course. The following topics are particularly relevant: the theory of individual choice under uncertainty (expected utility, risk aversion) and in a strategic context (Nash equilibrium); the theory of market structure under perfect competition and monopoly.
Course Level Recommendations
ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.
Recommended U.S. Semester Credits2.5 - 3
Recommended U.S. Quarter Units3.5 - 4
Hours & Credits
The objective of this course is the microeconomic analysis of financial markets and institutions. The focus is primarily on the asymmetric information approach. Students will learn the analytical tools needed to solve problems with moral hazard and adverse selection. They will also apply such tools to the analysis of issues related to credit and insurance markets.
The course should enable students to answer theoretical questions and to solve exercises related to the following topics:
- The principal-agent model with moral hazard;
- The principal-agent model with adverse selection.
- Insurance markets.
- The lender-borrower relationship: risk-taking incentives.
- banks as delegated monitors;
- credit rationing & the role of collateral;
- liquidity risk and regulation: lender of last resort, deposit insurance.
- I. MACHO-STADLER AND PÉREZ-CASTRILLO: "An introduction to the economics of information", Oxford University Press, 2001 (second edition). Chapters: 1, 2, 3 (only 3.1-3.2-3.3-3A.3-3B.3), 4 (only 4.1-4.2-4.3-4B.1).
- X. FREIXAS AND J.-C. ROCHET: "Microeconomics of banking", MIT Press, 2008 (second edition). Chapters: 2 (only 2.1-2.2-2.3-2.4), 5, 7.
Lessons and exercises solved together with the teacher in classrooms.
Written examinations (exercises and theory questions).
Courses and course hours of instruction are subject to change.
Eligibility for courses may be subject to a placement exam and/or pre-requisites.
ECTS (European Credit Transfer and Accumulation System) credits are converted to semester credits/quarter units differently among U.S. universities. Students should confirm the conversion scale used at their home university when determining credit transfer.
Please note that some courses with locals have recommended prerequisite courses. It is the student's responsibility to consult any recommended prerequisites prior to enrolling in their course.