PhD Course: Financial Stability

When:03 December 2013
, 16:00
 - 18:00
Where:RuW 4.202

Speaker: Jean Charles Rochet, UZH and SFI

Title: Financial Stability


Please note that students will not get credit points for attending this course. Registration is not required.


The objective of the course is to synthetize recent research on financial stability and macro prudential regulations.

Lectures 1,2,3 will be held on

  • Tuesday, 3rd December 2013, 4 pm to 6 pm in RuW 4.202, and
  • Wednesday 4th December 2013, 10 am to 12 am, in HoF 2.45 Boston

The dates of Lectures 3, 4 and 5 are February 4th and 5th, 2014 (tbc).


Lecture 1: The lender of last resort

An analysis of the economics and politics of banking crises, and episodes of bail-outs of failing financial institutions.

Rochet Vives (2004) “The Lender of last Resort: was Bagehot right after all?” JEEA, 6, 1116-1147, reprinted in Rochet, J.C. (2008) “Why are there so many banking crises?  Princeton University Press, chapter 2


Lecture 2:  Capital regulation and credit cycles

Rationale for solvency regulations: micro VS macro-prudential.

Will Basel III be sufficient? Countercyclical Capital buffers.

 Admati et al (2011) “Why bank capital is not expensive”

Gersbach and Rochet (2013) Capital Regulation and Credit Fluctuations” dp SFI


Lecture 3: Short term financing by banks: limited private gains, huge social losses

Can short term debt really discipline bankers?

Admati-Hellwig (2013) “Does Debt Discipline Bankers? An Academic Myth about Bank Indebtedness” dp GSB Stanford

Repullo-Rochet-Vo (2013)”Optimal Debt Maturity”dp SFI


Lecture 4: What to do with systemic institutions?

An analysis of the Too Big To Fail problem. What can be done for curbing the behavior of Systemically Important Financial Institutions (SIFIs)?  Is it necessary to regulate bankers’ pay?

Bebchuk, L.A. and H. Spamann (2009) “Regulating Bankers’ Pay” Harvard Law School DP 641.

Bolton, P., H. Mehran and J. Shapiro (2010) “Executive Compensation and Risk Taking” New York Fed Staff report no. 456.

Rochet- Zargari (2013) “How to Finance SIFIS?” dp SFI


Lecture 5: Conclusion: What doctrine for macro-prudential regulators?

Hanson Kashyap and Stein (2011) “A Macro-prudential Approach to Financial Regulation” Journal of Economic Perspectives.