PhD-level Mini-course: Banking Theory - Anjan Thakor (Washington University in St. Louis)

When:11 November 2019
  - 13 November 2019
, 09:00
 - 12:00
Where:Room HoF E.21, House of Finance

Title: Banking Theory

Lecturer: Anjan Thakor (John E. Simon Professor of Finance, Olin School of Business, Washington University in St. Louis)

Description:

These lectures are intended to first cover two main and connected topics: what economic functions  financial intermediaries serve, especially in the context of how they create liquidity and consequently risk; and how these lead to financial crises, with a discussion of the role of bank capital. Our focus will be on the foundational theories on these topics, but we will spend time on discussing the empirical evidence on the theories and what interesting future empirical tests can be conducted. We will then cover two other topics:  bank culture and Fintech.

Syllabus: download (pdf)

Schedule:

11 November: 10 a.m. - 1 p.m. (3 hours) - room HoF E.21

12 November: 10 a.m. - 1 p.m. (3 hours) - room HoF E.21

13 November: 9 a.m. - 12 p.m. (3 hours) - room HoF E.21

Reading list:

A. What Do Financial Intermediaries Do?

(1) Diamond, D. and Dybvig, P., “Bank Runs, Deposit Insurance and Liquidity”, JPE 91, 1983.

(2) Jacklin, C., “Demand Deposits, Trading Restrictions and Risk Sharing”, in E. Prescott and N. Wallace (eds.) Contractual Arrangements for Intertemporal Trade, Chapter 11, pp. 26–47, University of Minnesota Press.

(3) Calomiris, Charles and Charles Kahn, “The Role of Demandable Debt in Structuring Optimal Banking Arrangements”, AER, June 1991, pp. 497–513.

(4) Diamond, D.W. and R. Rajan, “Liquidity Risk, Liquidity Creation and Financial Fragility: A Theory of Banking,” JPE 109-2, 2001. 

(5) Donaldson, J., Piacentino, G. and Thakor, A.V., “Warehouse Banking,” JFE, 2018.

(6) Thakor, A.V., “The Financial Crisis of 2007–09: Why Did it Happen and What Did We Learn?”, RCFS, 2015.

B. Bank Capital Culture and Financial Stability:  Theory and Evidence

(7) Mehran, H., and A.V. Thakor, “Bank Capital and Value in the Cross-Section,” RFS April 2011. 

(8) Holmstrom, B. and J. Tirole, “Financial Intermediation, Loanable Funds and the Real Sector”, QJE 112(3), August, 1997.

(9) Thakor, A.V., “Bank Capital and Financial Stability: Economic Tradeoff or Faustian Bargain?”, ARFE, December 2014, pp. 185–223.

(10) Coval, J. and Thakor, A.V., “Financial Intermediation as a Beliefs Bridge Between Optimists and Pessimists,” JFE 75-3, March 2005. 

(11) Bouwman, C., H. Kim and S. Shin, “Bank Capital and Bank Stock Performance,” WP, Texas A&M, August 2018.

C. Fintech and Banking

(12) Thakor, A.V., “Banking and FinTech:  What Do We Know?”, JFI, 2019. 

D. Bank Culture

(13) Song, F. and A.V. Thakor, “Bank Culture”, JFI, 2019.

Registration is required!