FIE448 Banking and FinTech

• Topics

  This is a master-level course consisting of the basic microeconomic theory of banking, financial crisis, financial innovation, and FinTech, as well as discussions of practical issues related to these theories.

  1. Introduction : Banking, financial crisis, financial innovation and FinTech.
  2. The role of central banks , such as the FED. Introduction to monetary policies: open market operations, quantitative easing, the lender of the last resort, etc.
  3. The role of financial markets : Why do we need financial markets? The role of financial markets and transaction costs in financial markets.
  4. Existence of banks : Why do banks exist? Functions of banks; The model of bank loans; agency problems (adverse selection and moral hazard) and the design of loan contracts.
  5. Financial innovation : The underlying theory of certain financial innovation. How did securitization contribute to the 2008-2009 financial crisis?
  6. Bank runs, financial crisis and regulation : Why bank runs? How to stop a bank run? What is special in the 2008-2009 financial crisis? Introduction to banking risk management and regulation.
  7. FinTech : The new developments in the banking sector: Bloackchain, cryptocurrencies, P2P lending, crowdfunding, digital payment, etc. 

• Learning outcome

  After this course, students are expected to

  Knowledge:

  • Understand the important economic roles of financial intermediaries, such as the role of commercial banks, investment banks and other financial intermediaries, both in theory and in practice.
  • Understand the important economic roles of central banks.
  • Understand the main businesses and products of banks, especially those of commercial banks, both in theory and in practice. These products reflect the economical roles of banks and are linked to various risks of banks.
  • Understand bank runs and how it can start a financial crisis, both in theory and in practice. Especially, the 2007-2009 Financial Crisis was initiated from the subprime crisis and runs on repos.
  • Understand how bank regulations to prevent or stop a bank run or financial crisis.
  • Understand recent financial innovation in the banking sector and their underlying motives. Know how securitization "creates" the 2007-2009 financial crisis.
  • Know the new developments in the banking sector, such as FinTech (including Bloackchain, cryptocurrencies, P2P lending, crowdfunding, digital payment, etc.), and be aware of the main FinTech advances and their motives.
  • Know the basic models of shadow banking. 

  Skills:

  • Using the concepts, methods and knowledge that are introduced in the course, you should be able to analyze and write professional reports, articles and business cases concerning banking, financial crises, financial innovation, and new developments in FinTech.
  • Through the course, you should have developed good analytical skills, have learned to work independently with advanced problems in banking

  General Competence:

  • Be able to understand economic and finance models and apply these models to solve practical issues.
  • Be capable of applying new knowledge throughout your career.

• Teaching

  Plenary lectures.

  It will be possible to follow the course digitally.

• Requirements for course approval

  One group assignment. Each team should have 3 - 4 members, and hand in one solution per team.

• Assessment

  The final grade is based on two parts:

  (1) Case study (in groups each with 4-5 members): 30%

  (2) Digital, 3-hour individual home exam: 70%

  Both only given in English

• Grading Scale

  A-F

• Computer tools

  none

• Literature

  The course material consists of lecture slides, lecture notes, and selected articles from academic journals.