First cycle
degree courses
Second cycle
degree courses
Single cycle
degree courses
School of Economics and Political Science
ECONOMICS AND FINANCE
Course unit
FINANCIAL ECONOMICS
ECM0013170, A.A. 2017/18

Information concerning the students who enrolled in A.Y. 2017/18

Information on the course unit
Degree course Second cycle degree in
ECONOMICS AND FINANCE (Ord. 2017)
EC1935, Degree course structure A.Y. 2017/18, A.Y. 2017/18
N0
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Degree course track BANKING AND FINANCE [001PD]
Number of ECTS credits allocated 10.0
Type of assessment Mark
Course unit English denomination FINANCIAL ECONOMICS
Department of reference Department of Economics and Management
Mandatory attendance No
Language of instruction English
Branch PADOVA

Lecturers
Teacher in charge BRUNO MARIA PARIGI SECS-P/01

Mutuated
Course unit code Course unit name Teacher in charge Degree course code
EPP6077337 ADVANCED MICROECONOMICS BRUNO MARIA PARIGI EC1935

ECTS: details
Type Scientific-Disciplinary Sector Credits allocated
Core courses SECS-P/01 Political Economy 10.0

Mode of delivery (when and how)
Period First semester
Year 1st Year
Teaching method frontal

Organisation of didactics
Type of hours Credits Hours of
teaching
Hours of
Individual study
Shifts
Lecture 10.0 70 180.0 No turn

Calendar
Start of activities 02/10/2017
End of activities 19/01/2018

Syllabus
Prerequisites: Strongly suggested prerequisites: College Math and Statistics. Course unsuitable for students with weak math and stat background.
Target skills and knowledge: Students will learn the basics issues about the functioning of, money, capital markets, financial institutions, and of some of the securities exchanged.

A critical understanding of the current financial crisis is also a goal of this course.

The course adopts a micro perspective, with particular emphasis on information issues.

Math and stat used constantly to present models.
Examination methods: Exam sessions: written. Students are expected to answer 4 questions: 3 are closed form analytical questions; 1 is an open question aimed at testing critical thinking.

Copies of previous exams and their solutions are available on line.

Students are invited to obtain them to familiarize with style and difficulty.
Assessment criteria: 90% exam performamce
10% class participation
Course unit contents: FIRST WEEK: MONEY

1. Barter economy and monetary economy. Money in the Blanchard-Fisher-Wicksell model.
2.Money demand for transaction purposes: the Baumol-Tobin model.
3. A review of expected utility.
4. Money demand for “speculative” reasons: the Tobin model.
5. Money demand for precautionary reasons: the Whalen model.

SECOND WEEK: INTRODUCTION TO THE FUNCTIONING OF THE FINANCIAL MARKETS

6. Operators in surplus and in deficit. Direct and indirect finance.
7. The most common types of financial contracts: bonds and stocks.
8. The role of collateral
9. Modigliani Miller Theorem

THIRD WEEK: ASYMMETRIC INFORMATION IN FINANCE

10. Introduction to asymmetric information: moral hazard and adverse selection.
11. Deviations from Modigliani- Miller Theorem.
12. Moral hazard in finance: Relationship between direct and indirect finance: Diamond 1991 model (file DIAMOND_JPE_1991.pdf; schema_razionamento_Diamond.doc)
13. Adverse selection in finance: and example with the Tirole model of firm sale
14. Adverse selection in finance: credit rationing in the Stiglitz-Weiss model

FOURTH WEEK: ASSET PRICING

15. The efficient market hypothesis. That is “what everyone knows is not worth knowing”. (file: efficient_mkt_hp.ppt)
16. The Gordon growth model
17. The wisdom of crowds? The jar experiment
18. How financial markets function if prices do or do not reveal information. An introduction to the Grossman-Stiglitz paradox.
19. Volatility and market efficiency: Shiller model, too much volatility for market efficiency (file: Efficient_mkt_hp_against.pdf)
20. Volatility and market efficiency are consistent in Gordon model. (file: Efficient_mkt_hp_in_favor.pdf)

FIFTH WEEK: THE 2007-200? FINANCIAL CRISIS

21. Facts. Origins. Explanations. Policies
22. Speculative Bubbles (files rational_bubbles.pdf; , another_way_to_establish_rational_bubbles.ppt Bolle speculative_parigi.ppt)
23. Credit expansion and bubbles (file Moral hazard and bubbles.pptx)
24. Value at risk and leverage (file Adrian and Shin.ppt)


SIXTH WEEK: CRISIS AND SECURTIZATION

25. Securitization (file Securitized banking and the run on the repo)
26. Structured finance: an example of CDOs (file Coval, Jurek, Stafford)
27. Liquidity crisis: when everybody runs for the exit (file: Pedersen.ppt)
28. Consequences of financial crises (Crisis_consequences.ppt)
29. Public debt and crisis (file: reinhart_rogoff_revisited.jpg)
30. Diabolic loop (file:Diabolic_loop.pptx)
31. Dr. Li’s formula (file: What went wrong with securitization.pptx)

SEVENTH WEEK: FINANCIAL AGENCY

32. Corporate Governance: control benefits and ownership structure: the model by Jensen-Meckling. (JENSEN_MECKLING. doc)
33. Salaries of CEOs (from Wall Street journal on line) and in the financial sector (Philippon_reshef.ppt)
34. Control through minority ownership structures. The model by Bechuck. (file BEBCHUCK_ET_AL.pdf)
35. Ownership structure around the world; La Porta et al. (file: la_porta_ownership_around.pdf)

Schedule subject to minor changes.
Planned learning activities and teaching methods: Presentation of mathematical models by teacher.
Additional notes about suggested reading: There is no textbook, only teacher’s lecture notes.

Most of the lectures are on line in the web site of this course and the relevant file is indicated near the topic.

Previous exams and solutions are on line in the web site of this course.
Textbooks (and optional supplementary readings)
  • none, --. --: --, --. Cerca nel catalogo