Overview


    Management of Financial Institutions is meant to provide an introduction to the operating principles and objectives of financial intermediaries and their economic foundations. The course proceeds from a contemporary commercial-banking perspective and develops a framework for decision making in credit markets characterized by their global nature, financial innovation, rapidly changing competitive forces, and disintermediation. In addition to exchange in credit markets, balance-sheet management techniques, risk measurement and management, and regulation and supervision, we will touch upon the lender-borrower relationship, competition among intermediaries, and financial regulation. Using the recent twin financial and economic crises as backdrop, there is a particular focus on the informational forces, which shape financial intermediation, the foundations for risk management, and the financial instruments which are particularly important for financial institutions.

Objectives


    The course develops the conceptual foundations for managing financial institutions, lending and risk-management policies, borrower behavior, balance-sheet management, regulation, and banking supervision. Its objective is to acquaint students with contemporary bank-management practices, the rudiments of financial contracting and banking theory, and their operational implications. Students can be expected to become familiar with

1.the economic function of financial intermediaries;
2.balance-sheet management principles;
3.core challenges: interest rate and credit risk;
4.ancillary risks: market, liquidity, and FX risk;
5.key derivatives instruments and market-based risk management;
6.deposit insurance, banking regulation, and supervisory failures.