Starting from the very basic, such as, what banks do, and using economic theory and the financial statements of financial institutions as educational tools, this course analyzes the economic and regulatory forces that shape the architecture of and competition in the financial system, as well as bank strategies.

Though practical in orientation, and case-study based, the course offers strong theoretical foundations to understand the strategic interactions of all participants, banks, regulators, supervisors, investors, depositors, borrowers,… shedding light on the role of incentives and information.

Among the topics covered are asymmetric information in financial contracts and its implications, how banks resolve asymmetric information problems, valuing a bank, the role of the institutional framework and of the ‘rule of law’, financial repression, the economic principles of bankruptcy and debt rescheduling, the interactions between the financial system and the ‘real’ economy, financial crises and Basel II and III.