ØABED2300 The Economics of Banking Emneplan

In this course we will study the role of commercial and investment banks in a country like Norway. As highlighted by the recent financial crisis, a well-functioning banking system is crucial for any modern economy and a crisis in the banking sector can have widespread consequences. We will first address questions like: why do we have banks? What is the role of banks? We will then turn our attention to the ways banks are managed; we will consider liquidity management, risk management, and credit rationing. Finally, the course will cover recent trends in the banking industry, including securitization, deregulation and globalization.

ØASØK1000 Microeconomics I

No prerequisites.

On successful completion of this subject the candidate will have the following knowledge, skills and general competence

Knowledge

The student will have knowledge of:

• The economic incentives of banks
• Issues related to the management of banks
• Recent trends in the banking industry

Skills

The student will be able to analyze:

• the current business model of banks
• key issues in bank management
• how banks are affected by regulation and competition
• how monetary policy and bank behavior interact to affect aggregate demand and the risks affecting individual banks and the banking system as a whole

Competence

The student should be able to read and understand project reports and journal articles on the following topics:

• The theory of the banking firm
• Liquidity management
• Risk management
• Credit rationing
• Banking competition
• Banking regulation
• The macroeconomics of banking

The course is organized into a series of two-hour lectures and seminars. Students are expected to play an active role in lectures and seminars. Students will also be required to discuss course themes during lectures and seminars.

There will be 3 individual hand-in assignments that must be approved before the student can sit in the final exam. If an assignment is not approved on the first attempt, the student will be allowed to resubmit the assignment once. The teacher will give information regarding deadlines for handing in the assignments.

There is one final 4-hour exam at the end of the semester.

A list of reference aids allowed will be published on our website.

Grades are on a scale from A  to E for passing grades and F for fail.

An external grader will grade the exam together with the internal grader.

In the written exam, a selection of at least 25% of the exam papers will be assessed by two examiners. The grades awarded to exam papers assessed by the external and internal examiner will be used to determine the level of all exam papers.