This course aims to present empirical applications of important contemporary issues for both banking theory and banking regulation policy. A key objective is to help students to read, understand and assess the scientific contribution of papers in empirical banking. Each session will provide a quick reminder of the main theoretical issues related to the topic of the course. Standard research methodologies used in empirical banking (cross-sectional and panel regressions, difference-in-difference regressions, instrumental variables, event studies etc.) will be briefly presented and then illustrated by a selection of relevant papers, thus providing students with a rich overview of the major issues and state-of-the-art findings in the field today.
– Why do banks exist? The role of relationship-banking in normal times and during crises.
– New banking? Promises and pitfalls of securitization and the originate-and-distribute model.
– Do we need big banks? The rise of the banking giants, economies of scale and scope, the too-big-to-fail problem.
– More finance, more growth? Financial development, the efficiency of financial intermediation, rents and bankers’ pay.
– Global banks: more stability or more contagion? The international transmission of policy and liquidity shocks.
– The transmission of monetary policy: the bank lending channel.
– Banking regulation: regulating bank capital and liquidity, benefits and costs.
The course will be mostly based on a selection of classical and recent papers from the major journals in banking and finance. A complete list of references will be circulated at the beginning of the course.
Nevertheless, useful textbooks for the course are:
Angrist, J. D. and J.-S. Pischke, Mostly harmless econometrics: an empiricist’s companion, Princeton University Press, 2009.
Degryse, H., M. Kim and S. Ongena, Microeconometrics of Banking: Methods, Applications, and Results, Oxford University Press, 2009.
Freixas, X. and Rochet, J.C., Microeconomics of Banking, 2nd edition, MIT Press, 2008.