Financial Crises and Banking Regulation
Run by Bangor Business School
15.000 Credits or 7.500 ECTS Credits
Organiser: Ms Nicola Kirby
Overall aims and purpose
The module provides an introduction to prudential regulation and the management of financial crisis, outlining why this form of regulation may or may not be required, how it has been implemented and its many drawbacks. Within this module it is expected students will be able to determine how and why financial crisis arise and question why potential remedies have been more and less successful in amending for these crisis phenomena.
The module examines and questions the potential causes of and solutions to banking and financial crises. Initially, a theoretical and historical approach is used to explore and assess the diversity of explanations for financial and banking crisis forwarded over the last century. Why banks and financial markets are inherently vulnerable to crises and how policy makers and institutions have responded to these circumstances is investigated and questioned. Lastly, the relative success of otherwise of monetary policy, bank supervision and prudential regulation in mitigating or exacerbating financial and banking crises is critically discussed. The modules makes use of real cases and references to developing policy and regulatory prescriptions to evaluate causes of financial crises and efficacy of banking regulation.
B- to B+ (60-69%): Very good performance Most of the relevant information accurately deployed. Good grasp of theoretical/conceptual/practical elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Evidence of the use of creative and reflective skills.
Understands most but not all o Evidence of background study o Focussed answer with good structure o Arguments presented coherently o Mostly free of factual errors o Some limited original interpretation o Well known links between topics are described o Problems addressed by existing methods/approaches o Good presentation with accurate communication
Excellent standard: 70+ An outstanding performance, exceptionally able. The relevant information accurately deployed. Excellent grasp of theoretical/conceptual/practice elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Strong evidence of the use of creative and reflective skills.
c- to c+ (50-59%): marginal failing yet compensatable work No major omissions or inaccuracies in the deployment of information/skills. Some grasp of theoretical/conceptual/practical elements. Integration of theory/practice/information present intermittently in pursuit of the assessed work's objectives.No major omissions or inaccuracies in the deployment of information/skills. Some grasp of theoretical/conceptual/practical elements. Integration of theory/practice/information present intermittently in pursuit of the assessed work's objectives.• Knowledge of key areas/principles only; • Weaknesses in understanding of main areas; • Limited evidence of background study; • Answer only poorly focussed on question and with some irrelevant material and poor structure; • Arguments presented but lack coherence; • Several factual/computational errors; • No original interpretation; • Only major links between topics are described;
Critically assess the importance of financial crises and bank regulation in a contemporary context
Evaluate the subject specific roles, features and relationships within and between firms.
Question, critically assess and apply apposite banking and finance theory
Understand, identify and judge the efficacy of different economic policies and theories
To consider the appositeness and decipher different policy solutions to challenging financial circumstances.
Teaching and Learning Strategy
The study guides introduce and explain theoretical concepts and practical aspects of financial crises and bank regulation and introduce a wide range of real world cases of crisis. Through assessment of this materials supported by live web discussion and recorded lectures the lessons raised by theory and policy actions can be explored and critically evaluated.
Students are also directed to the relevant literature, including book chapters, journal articles (theoretical and empirical), books and internet sources that they are expected to read during their private study time. Private study is supported by interactive materials delivered via blackboard, online discussions and email contact with staff.
The module include a large individual assignment which will draw on both the reader and wider readings.
Three seminar web-ex sessions are provided to allow students to engage with the materials in a live internet based session over the Web-ex platform this is designed to encourage student interaction and discussion of study materials and module aims.
- Literacy - Proficiency in reading and writing through a variety of media
- Self-Management - Able to work unsupervised in an efficient, punctual and structured manner. To examine the outcomes of tasks and events, and judge levels of quality and importance
- Exploring - Able to investigate, research and consider alternatives
- Critical analysis & Problem Solving - Able to deconstruct and analyse problems or complex situations. To find solutions to problems through analyses and exploration of all possibilities using appropriate methods, rescources and creativity.
- Presentation - Able to clearly present information and explanations to an audience. Through the written or oral mode of communication accurately and concisely.
- Argument - Able to put forward, debate and justify an opinion or a course of action, with an individual or in a wider group setting
Subject specific skills
- Abstraction. From the study of economic principles and models, students see how one can abstract the essential features of complex systems and provide a useable framework for evaluation and assessment of the effects of policy or other exogenous events. Through this, the typical student will acquire proficiency in how to simplify while still retaining relevance. This is an approach that they can then apply in other contexts, thereby becoming more effective problem-solvers and decision-makers.
- Analysis, deduction and induction. Economic reasoning is highly deductive, and logical analysis is applied to assumption-based models. However, inductive reasoning is also important. The development of such analytical skills enhances students' problem-solving and decision-making ability.
- Quantification and design. Data, and their effective organisation, presentation and analysis, are important in economics. The typical student will have some familiarity with the principal sources of economic information and data relevant to industry, commerce, society and government, and have had practice in organising it and presenting it informatively. This skill is important at all stages in the decision-making process.
- Framing. Through the study of economics, a student should learn how to decide what should be taken as given or fixed for the purposes of setting up and solving a problem, i.e. what the important 'parameters' are in constraining the solution to the problem. Learning to think about how and why these parameters might change encourages a student to place the economic problem in its broader social and political context. This 'framing' skill is important in determining the decision-maker's ability to implement the solutions to problems.
- An appreciation of the nature of the contexts in which finance can be seen as operating, including knowledge of the institutional framework necessary for understanding the role, operation and function of markets and financial institutions (e.g. the economic, legal, regulatory and tax environment, both national and international; the firm; the capital markets and the public sector).
- A knowledge of the major theoretical tools and theories of finance, and their relevance and application to theoretical and practical problems (e.g. concept of arbitrage and examples of its use; financial mathematics and capital budgeting criteria; informational efficiency; optimal risk sharing; portfolio theory; asset pricing models and the valuation of securities; cost of capital; derivative pricing; risk management; information asymmetry; principal agency relationships; signalling; Fisher separation and capital budgeting criteria; behavioural finance; term structure and the movement of interest rates; determination of exchange rates and financial intermediation).
- An understanding of the relationship between financial theory and empirical testing, and application of this knowledge to the appraisal of the empirical evidence in at least one major theoretical area. The appraisal should involve some recognition of the limitation and evolution of empirical tests and theory (eg the efficient markets hypothesis; anomalies; pricing of derivatives and other securities; bond portfolio management; exchange rates; raising capital and capital structure).
- An understanding of financial service activity in the economy, and an appreciation of how finance theory and evidence can be employed to interpret these services (for example, information asymmetry, adverse selection and moral hazard could be employed to analyse the fundamental nature of services, such as insurance, pensions, bank lending and consumer credit, and also explore fundamental problems arising in such financial service provision. Efficient market hypothesis could be used to explore evidence for fund manager performance and the effectiveness of equity and bond saving services).
An Academic Reader supplied to students
Textbook (supplied to students) Title : The Fundamental Principles of Financial Regulation (Geneva reports on the world economy) Author : Brunnermeier, M., Crokett, A., Goodhart, C., Persaud, A. P. and Shin, H. Publisher : Centre for Economic Policy and Research
Additional Recommended Text:- not included in this pack
Cross Border Banking in Europe: Implications for Financial Stability & Macroeconomic Policy.
By Allen, F., Beck, T., Carletti, E., Lane, P., Schoenmaker, D. and Wagner, W. ISBN 9781907142369
Claessens, S., Herring, R.J., Schoenmaker, D. (2010). A Safer World Financial System: Improving the Resolution of Systemic Institutions. Geneva Reports on the World Economy 12. http://www.voxeu.org/article/safer-world-financial-system
Courses including this module
Optional in courses:
- N3BN: MBA Chartered Banker year 1 (MBA/CBDL)