Banking Regulation and Resolution of Banking Crises - (currently under development) [C356]
Introduction
Bank crises occur frequently in many countries and across many time periods. Many go beyond the distress of individual banks and have systemic effects, threatening the banking system as a whole. Since the nineteenth century governments and central banks have developed increasingly sophisticated methods to regulate banks in order to minimize the risk of bank distress and intervention tools to mitigate its effect. Since crises recur, as in the USA and United Kingdom in 2007, they motivate heightened discussion of the merits of regulation and intervention and their design. In this course you study technical aspects of bank regulation, supervision, and intervention to resolve crises. It relates the techniques to fundamental principles and to examples of countries’ experience.
Aims & Objectives
By the end of this course you will be able to:
Distinguish bank regulation from bank supervision
Evaluate the arguments for and against regulation
Understand the links and risk distribution between banks, other financial institutions, and financial markets
Appraise various methods of regulation and supervision
Understand the Basel Core Principles of bank supervision
Use CAMELS indicators to assess banks’ soundness
Evaluate deposit insurance schemes
Understand the changing nature of lender of last resort facilities
Resources
Course study guide
Students receive a looseleaf binder containing eight
‘course units’; these texts are carefully structured
to provide the main teaching and are equivalent to
traditional course lectures, defining and exploring
the main concepts and issues, locating these within
current knowledge and introducing and linking with
articles in the reader.
Reader
A selection of core readings, in the form of academic articles on bank regulation and the resolution of bank crises provided in a course reader.
Course Timetable
The course timetable shows the linkage between the various components of the course and indicates the study and assignment schedule.
Course Content
Unit 1 Why regulate banks?
Unit 2 Regulating banks’ balance sheets
Unit 3 Bank supervision: Basel Core Principles and
CAMELS
Unit 4 Bank crises: Lender of last resort and
deposit insurance schemes
Unit 5: Restructuring distressed banks
Unit 6 Banks and financial markets: individual risk,
systemic risk, and leverage
Unit 7 Structure and roles of regulatory authorities
Unit 8 International dimensions of regulation and
financial stability
Tuition & Assessment
Assignments are each worth 15% of your total mark.
You will be expected to submit your first assignment
by the Tuesday of Week 5, and the second assignment
at the end of the course, on the Tuesday after Week
8. Assignments are submitted and feedback given
online. In addition, queries and problems can be
answered through the Online Study Centre.
You will also sit a three-hour examination on a
specified date in October, worth 70% of your total
mark. An up-to-date timetable of examinations is
published on the website in April each year.