Student guide Faculty of Economics A.Y. 2010/11

Economics of Financial Intermediaries
Aim of the course
The course examines the functions and operational activities of financial intermediaries, illustrating how they serve as a hub for managing different types of risk: credit risk, market risk, interest risk, currency risk, and many others. The aim is to equip students with a unified key to understanding the economical management of intermediaries operating under a variety of institutional frameworks and regulatory systems. A description of the different operations that make up the work of intermediaries will be followed by a discussion of the necessity for regulation and administrative surveillance of their activities.
1. Motivations for financial intermediation
2. Forms of financial intermediation
3. Financial intermediation in Italy and the USA
4. Non-bank intermediaries: insurance companies and mutual funds
5. Types of intermediaries: banks
6. The universal bank model
7. Capital raising activities
8. Deposit insurance
9. Capital investment activities
10. Credit risk
11. Extra-balance sheet banking activities
12. Interest risk: protecting the margin of interest
13. Interest risk: protecting the share value
14. Exchange activities
15. Currency risk
16. Country risk
17. Operating risk
18. Liquidity risk: inter-bank and refinancing operations
19. Role of risk capital
20. Surveillance activities
21. Capital requirements
The examination procedure will be communicated at the start of the course.
Reading list
Saunders A., M. M. Cornett, Financial Institutions Management 5th edition, McGraw Hill
Additional texts may be set at the start of the course.