Learning Outcomes
The course is intended to endow students with a thorough theoretical and applied understanding of the architecture of the financial system, financial stability issues, modelling of financial instability, micro- and macro-prudential policies; LOLR policies, and how to interpret recent crises from these perspectives. Students will be able to provide diagnostic analysis of financial instability and formulate policy recommendations to address crisis from an ex-ante and ex post perspective.
Content
The seminar covers financial (in)stability issues and how the market mechanism, the financial architecture, regulation and supervision, and central banks as lenders of last resort can jointly ensure stability without jeopardising the efficiency of financial intermediation. A broad range of (partial) models of financial instability will be provided, explaining sudden changes in the performance and stability of financial markets and intermediaries. A broad overview of regulatory tools will be provided including an assessment of the achievements and drawbacks of tighter regulation. Possible inconsistencies between micro-prudential regulation and macro-financial stability are analysed.
Finally, the role of the lender of last resort will be explained and modelled.
- Trainer/in: Ronja Maria Marcath