Universidad Carlos III de Madrid
Area of Study
Business, Business Administration, Business Management, Economics, Finance, Financial Management, Management Science
Taught In English
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 Credits3
Recommended U.S. Quarter Units4
Hours & Credits
Bachelor in Business Administration
Departamento de Economía de la Empresa
ECTS Credits : 6.0
STUDENTS ARE EXPECTED TO HAVE COMPLETED
Microeconomics, Financial Economics
COMPETENCES AND SKILLS THAT WILL BE ACQUIRED AND LEARNING RESULTS.
The objective of this course is to study the microeconomics of banking theory. To achieve this objective, the student should acquire a series of knowledge and skills. With respect to the series of knowledge, at the end of the course the student should be able to:
- Understand the role that financial intermediaries play in the economy
-Understand the vulnerability of financial intermediaries to bank runs
- Analyze the challenges of bank regulation
- Be aware of the main risks faced by banks
With respect to skills, at the end of the course the student should be able to:
- Understand the foundations of the economics of banking and be able to apply to any context they encounter in their profession
- Estimate the different banking risks from a bank balance sheet
- Obtain information about prices or other relevant parameters for intermediaries or markets
DESCRIPTION OF CONTENTS: PROGRAMME
1.- FINANCIAL INTERMEDIATION
1.1.- The chain of flows in a financial system
1.2.- Microeconomic foundations of financial intermediation
1.3.- Financial disintermediation: Technological change and financial innovation
1.4.- Financial institutions: concept and classification
2.- THE DEMAND DEPOSIT CONTRACT
2.1.- Bank liabilities: concept and classification
2.2.- The nature and economic incentives of the demand deposit contract
2.3.- Deposit insurance
- The need for a deposit insurance system: Historical perspective
- The deposit insurance system: "El fondo de garantía de depósitos"
- Deposit insurance and moral hazard
3.- BANKING CRISES
3.1.- Bank runs: theory and empirical evidence
3.2.- Pure panic runs models (Diamond- Dybvig)
3.3.- Information induced runs models
4.- BANK REGULATION
4.1.- The need for bank regulation
4.2.- Objectives of bank regulation
4.3.- Capital requirementsEvolution of bank regulation in the US and Europe
4.4.- Problems with bank regulation
5.- CREDIT RISK ANALYSIS
5.1.- Bank assets: concept and classification
5.2.- Concept of credit risk
5.3.- Factors considered in credit risk analysis:
5.4.- Long term bank-borrower relationships
5.5.- Credit Rationing
6.- INTEREST RATE RISK
6.1.- What is interest rate risk?
6.2.- Measuring interest rate risk with gap analysis
6.3.-Measuring interest rate risk with duration
7. LIQUIDITY RISK
7.1. Definition of liquidity risk
7.2 Liquidity risk versus solvency risk
7.3 Management of liquidity risk
LEARNING ACTIVITIES AND METHODOLOGY
Each topic or sub topic is presented by the professor in a theory session. After the theory session the students have to study the materials, do complementary readings and work on the relevant problem sets. These problem sets and questions from the students are solved in the next practical session. The problem sets have to be solved at home prior to the practical session. The course material for each topic (slides that will be used in theory sessions and problem sets to be solved in practice sessions) is provided in advance through the intranet in Aula Global 2. Each teacher has scheduled weekly office hours that the students can use to obtain extra help. Finally, students are required to do a presentation in groups.
Grades will be awarded on the basis of the following pieces of work:
- Continuous grading with exercises (10%). Students will be asked to solve some exercises in class.
-Presentations (10%): Additionally, students will do presentations on a particular topic, in different groups.
- Mid-term exam (20%) : Multiple Choice. 10-15 Questions. There is a penalty for wrong answers.
- Final exam (60%): Multiple Choice. 20 Questions. There is a penalty for wrong answers. It is compulsory to take this final exam. A minimum grade of 4 in the exam is required to pass the course
Students are obliged to take the final exam. In the re-take exam, the final exam can either account for 100% of the grade or 60% (the remaining 40% is the continuous evaluation).
% end-of-term-examination: 60
% of continuous assessment (assigments, laboratory, practicals?): 40
- S. Greenbaum y A. Thakor Contemporary Financial Intermediation, Academic Press Advanced Finance Series. Second edition, 2007
- J. López Pascual y A. Sebastián Gestión Bancaria, Mc Graw Hill. Tercera edición, 2008
- A. Calvo, A. Parejo, L. Rodríguez Saiz y A. Cuervo Manual del Sistema Financiero Español, Ariel, 2008
Please note that there are no beginning level Spanish courses offered in this program.
Courses and course hours of instruction are subject to change.
Eligibility for courses may be subject to a placement exam and/or pre-requisites.
Credits earned vary according to the policies of the students' home institutions. According to ISA policy and possible visa requirements, students must maintain full-time enrollment status, as determined by their home institutions, for the duration of the program.
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 reference fall and spring course lists as not all courses are taught during both semesters.
Availability of courses is based on enrollment numbers. All students should seek pre-approval for alternate courses in the event of last minute class cancellations
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.