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Docente
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CAMPIONI ELOISA
(programma)
Preliminaries: What is a bank and what are her functions: a close look at the balance sheet of banks.
Part I
Introduction to time, uncertainty and liquidity. (Chp. 2, Allen-Gale)
Introduction to asymmetric information problems. The case of Moral hazard (Introduction & Chapter 5, Salaniè)
Microeconomic foundations for financial intermediation. Why do banks exist. Banks in Arrow-Debreu. (Introduction & Chp. 1, Freixas-Rochet).
Banks as pool of funds: Diamond-Dybvig (1983). Bank runs as a sefl-fullfilling prophecy. The economic cycle and its effect on bank runs. (Chapter 3, Allen-Gale; Introduction, Freixas-Rochet).
Remedies to economic instability due to bank runs.
Banks as delegated monitors: Diamond (1984).
The effects of banks on financial markets: equilibria with credit rationing. Stiglitz-Weiss (1981) the example with moral hazard. The role of collateral as an incentive device (Bester-Hellwig).
Part II
Banks can fail: history and institutions. A discussion on the emergence of a financial crisis: the causes, the consequences and policy issues related to a crisis. (Chp. 1, Allen-Gale)
Financial market regulation as it has been designed before the current crisis.
Analysis of the features of the financial crisis of 2007-2009 in comparison with past crises’ episodes: the causes, the transmission mechanisms, the consequences.
A focus on the ongoing academic and policy debate on current issues in banking regulation.
 Main References
Freixas X. and J.-C. Rochet, Microeconomics of Banking, 1st Edition, MIT Press 1998
Allen F. and D. Gale, Understanding Financial Crises, Oxford University Press 2007
Salaniè B., The Economics of Contracts. A Primer, MIT press.
Tirole J., The Theory of Corporate Finance, Princeton University Press 2006
Supplementary readings
De Bonis R., La Banca, Le Bussole Carocci, 2008
Diamond- Dybvig, "Bank runs, deposit insurance and liquidity", JPE 2003
Diamond, "Financial intermediation and delegated monitoring", RES 1984
Diamond, "Financial intermediation as delegated monitoring: a simple example", 1996
Bester, "Screening vs rationing in credit markets with imperfect information", AER 1985
Stiglitz -Weiss, "Credit rationing in markets with imperfect information " , AER 1981
Bernanke, "Non-monetary effects of the financial crisis in propagation of the Great Depression", AER 1983
Caprio-Klingebiel, "Episodes of systemic and borderline financial crises", World Bank document, 2003 (available on World Bank website)
Reinhart-Rogoff, "From financial crash to debt crises", AER 2011
Cecioni-Ferrero-Secchi, "Unconventional monetary policy in theory and in practice", Questioni di Economia e Finanza (Occasional Papers) Bank of Italy, n.102, 2011 (available on the website of the Bank of Italy)
EXAM
The final exam of the course is a written exam, which will last at most 1h30 min. The students and the lecturers can voluntarily ask for an oral discussion. The oral discussion can contribute to the final grade for max 10 per cent (+ or - 3/30).
It will be divided into two sections: one related to the topics presented by Prof. E. Campioni and the other to the topics taught by prof. R. De Bonis.
The exam can be taken at most once for every session.
The pre-appello is an anticipation of the final exam, which can take place at the end of the course lessons. The pre-appello has an identical structure with respect to the final exam.
Those who hand in their exam on the pre-appello cannot sit in the summer exam, but can retake the exam in the fall. Those who decide to withdraw their exam in the pre-appello, can come back in the summer exam.
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