This course

• describes the main financial products and functions of banks, as well as the risks they undertake in order to contribute to social welfare, using as vehicle their main financial statements,
• explores bank risk management, including the risks from asymmetric information,
• explores the multi-faceted interactions between banks, the financial system, governments, central banks and the economy,
• analyses the private incentives of all players, from bank employees all the way to the top management of the supervisory authorities,
• stresses the role of information technology and of other forces of change,
• describes the dynamics of banking crises,
• highlights the logical underpinnings of the complex institutional framework that governs the operation of banks,
• uses current economic and financial developments, both domestic and international, to tie the course to the real world.

After completing this course, students are expected to

• analyse critically banks’ financial statements,
• understand bank risks and functions,
• understand the role and dilemmas of the institutional framework,
• assess the likely impact of changes in the institutional framework and in the economy on bank strategies,
• combine the logic of banking with macroeconomic and financial analyses for real-world economic decision-making.