The objective of this course is to provide the students with the necessary conceptual framework to analyze and comprehend the current problems of modern Financial Institutions (FI). It is structured to help them understand the perplexing issues of risk, regulation, technology, and competition that financial-service managers perceive as their greatest challenges for the present and future. The course provides an overview of the financial services industry, the role of the FIs in the economy, and the nature of economic frictions that make them special. It covers topics on the theory and practice of defining and measuring various types of risk FIs can be exposed to, as well as effective policies for successful risk management. At the end of this course, the students will have a deep understanding of the variety and the complexity of risks facing managers of modern FIs. It will become clear that the effective management of these risks is central to a FI’s performance and determines its strategic decisions. Finally, students will be introduced to financial crises, with special focus on the recent sub-prime crisis, and the respective consequences on the economy. Each class session will be structured to include lecture, class discussion and problem/case analysis.
