20264 - COMPARATIVE FINANCIAL SYSTEMS
Course taught in English
Go to class group/s: 31
Class-group lessons delivered on campus
By applying theory to practice, the course aims to: - Review the conceptual framework for analysing the role of financial systems and comparing them across countries and over time. In particular, we discuss the main channels of intermediation (banks vs. financial markets) and the link between credit and growth. The discussion hinges on theoretical and historical analysis and look at the main characteristics of the modern financial system. - Describe the structural changes of the global financial system in the last decades (the “great leveraging”, the “securitisation and the shadow banking system”, the “new financial intermediation”) and discuss their role in the financial crisis. - Discuss the flaws in the evolution of the financial systems (the “fault lines” according to an important book of Raghuram Rajan) and their relationship with the mainstream economic theory. - Examine the reaction of different financial systems to the financial crisis and the present strengths and weaknesses of the main financial systems. As far as Europe is concerned, we also examine the problems that European banks have been facing since the euro sovereign crisis and, more recently, since the start of the Covid-19 pandemic.
The course is divided in four parts:
- The theoretical framework (role of the financial system; fundamental literature on comparing financial systems).
- Stylized facts of the evolution of the main financial systems before and particularly after the crisis.
- Anatomy of a crisis (the three waves in US and Europe; the main causes of the crisis; a focus on Europe and in particular on the link between the sovereign debt and the banking crisis).
- The crisis and the strategic issues for the future of the main banking systems: financial issues (in particular the rise of non-performing loans); economic issues (low profitability in a scenario of low interest rates; the effect of the Covid-19 pandemic)
- Identify and discuss the main problems that financial intermediaries face when operating in different economic and historical conditions. They will be able to :
- Recognize and describe the main characteristics of a financial system.
- Summarize main determinants of the global financial and the euro sovereing crises.
- Explain what is the outlook at the beginning of 2021 for the main European banks.
- Critically interpret relevant stylized facts related to main trends in banking over the last decade.
- Compare financial systems and institutions across jurisdictions and explain why structural characteristics differ across countries and over time.
- Illustrate the impact of the global financial and the euro sovereign crises, and comment on the characteristics and criticisms of the regulatory responses to these crises.
- Illustrate the main consequences of the Covid-19 pandemic as well as the supervisory and regulatory measures to cope with it.
- Formulate hypotheses, design and develop, as well as present and defend, individual essays.
- Face-to-face lectures
- Guest speaker's talks (in class or in distance)
- Case studies /Incidents (traditional, online)
- Individual assignments
Frontal lectures are complemented with guest speakers' talks as well as individual assignments held by students on relevant topics agreed upon with the instructors. Students are advised to get familiar with the main international newspapers and magazines, such as “The Economist”, “Financial Times”, and “The Wall Street Journal”. Relevant news will be commented during classes.
Students will be asked to choose between the following exam options: (1) final written general exam; (2) individual assignment + oral presentation.
The final general exam will cover the entire course contents and will be made of a set of open and multiple choice questions.The individual assignment will be on a topic agreed upon with the instructors.
Exam options are structured in a way to enable the assessment of multiple skills, e.g., qualitative and critical abilities, as those required to interpret relevant stylized facts, compare financial systems and institutions across jurisdictions, and comment on the implications of certain policy measures. In particular, the individual assignment will enable to test students' written and oral capabilities , e.g., how to formulate and develop hypotheses, how to present and defend a project work.
Continuous assessment: Students are also given the possibility to gain extra-points by completing short individual notes based on reading, press releases, and incidents chosen by the instructors.
Details on all the assessment methods will be made available in B-B.
The course material is made of instructors' slides and a selection of academic and institutional papers. The list of the required material will be detailed at the beginning of the course and made available in Bboard.