Banking Summer School

Overview and Objectives

1. To understand the role of imperfect information and the role of financial institutions in the economy
2. To understand the specifics of banks' strategies and their impact on the overall allocation of capital in the economy
3. To understand the role of banks in maturity transformation and the inherent instability of the banking system
4. To understand the logic of banking regulation

Course Outline

1. Why do financial intermediaries exist?
2. The industrial organization approach to banking
3. Macroeconomic consequences of financial intermediation
4. Individual bank runs and systematic risk
5. Banking regulation

Basic Textbook (included in the course fees)

Freixas, X. and Rochet, J.C., Microeconomics of Banking , 2nd edition, MIT Press, 2008.

About the Instructor

Xavier Freixas is Professor at Universitat Pompeu Fabra, Emeritus Research Professor of the Barcelona GSE, and Research Fellow at CEPR. He is Chairman of the Risk Based Regulation Program of the Global Association of Risk Professionals (GARP) and past president of the European Finance Association. He has previously been Deutsche Bank Professor of European Financial Integration at Oxford University, Houblon Norman Senior Fellow of the Bank of England and Joint Executive Director Fundación de Estudios de Economía Aplicada FEDEA), and 1989-91, Professor at Montpellier and at Toulouse Universities. He has been a consultant for the European Investment Bank, the New York Fed, the European Central Bank, the World Bank, the Interamerican Development Bank, MEFF and the European Investment Bank. He is Associate Editor of Journal of Financial Intermediation, Review of Finance, Journal of Banking and Finance and Journal of Financial Services Research. He has published a number of papers in the main economic and finance journals (Journal of Financial Economics, Review of Financial Studies, Econometrica, Journal of Political Economy, and others).

Overview

The objective of this course is to present empirical applications of relevant questions for both banking theory and policy, mainly related to Systemic Risk, Crises, Macroprudential and Monetary Policy. An important objective is to read and understand scientific papers in empirical banking; to accomplish this objective, emphasis is placed on illustrating research methodologies used in empirical banking and learning the application of these methodologies to selected topics.

Selected Topics

1. Credit cycles
2. Securities and credit registers; large datasets
3. Fire sales, market and funding liquidity
4. Bank capital and macroprudential regulation
5. Risk-taking and credit channels of monetary policy
6. Real effects of financial shocks
7. Moral hazard vs. behavioral based risk-taking
8. Secular stagnation, banking and debt crises
9. Interbank contagion, bank runs and systemic risk
10. Banking globalization
11. Capital controls and capital flows to emerging markets
12. Macro vs. micro prudential policy

Basic Textbook (included in the course fees): Freixas, X., Laeven, L., and Peydró, J.L., Systemic Risk, Crises, and Macroprudential Regulation, Boston, MA: MIT Press, June 2015.

About the instructor

José-Luis Peydró is ICREA Professor of Economics at UPF, Barcelona GSE Research Professor, CREI Research Associate and CEPR Research Fellow. His research on Banking and Systemic Risk has been published in the top journals in Economics and Finance such as JFE, RFS, JF, AER and Econometrica. Professor Peydró has presented his research in top universities including Harvard, MIT, Princeton, Stanford, Columbia, NYU, LSE, Oxford and LBS and in policy organizations such as the Federal Reserve Board, New York Fed, IMF, WB, BIS, ECB, Bundesbank, and Bank of England, and has written a book on "Systemic Risk, Crises and Macroprudential Policy" published by MIT Press. José-Luis is currently a Member of the European Systemic Risk Board in Frankfurt, holds a PhD in Finance from INSEAD and a Master in Economics from CEMFI, and was awarded with the first prize by the Government of Spain for the student with highest GPA in finishing a BA in Economics in Spain in 1998.