FNC 556 - Financial Intermediation, Markets and Institutions, 3 credit hours

This course provides an integrated overview of both theoretical and practical issues related to the modern financial intermediation business. It covers four central topics. The course outlines the role and functions of the financial system and the nature of financial intermediation with special emphasis on current issues in banking. The course will also cover the main activities and types of financial institutions/intermediaries. Further, coverage is given to main types of financial markets and the exploration of issues related to the organizational structure of financial institutions and link them with ethics, professionalism and effective management. Broadly speaking, the course covers many forms of financial intermediation, but the primary focus is on banks. The main topics of this course, all of which are central to understanding the recent financial crisis, includes type of financial intermediaries (banks, mortgage institutions, insurance companies, pension funds, and investment banks) and their composition of assets and liabilities. Measuring and managing credit risk, interest rate risk, and liquidity risk. Off-balance sheet activities. Risk transfers using derivatives and securitization. Banks as liquidity providers. Bank runs and role of deposit insurance. Bank regulation, including capital requirements, liquidity coverage ratios, and net stable funding ratios. Capital requirements and the business cycle. Capital requirements and bank lending. The interaction of banks and central banks.