COURSE NUMBER:                                    EWMBA 232-1
 
COURSE TITLE:                               Financial Institutions & Markets
 
UNITS OF CREDIT:                         3 units
 
INSTRUCTOR:                                  Jim Wilcox

EMAIL:                                              jwilcox@haas.berkeley.edu
 
MEETINGS DAY(S)/TIME:             Tuesdays, 6.00 – 9:30pm

PREREQUISITE(S):                          EWMBA203

CLASS FORMAT:                             Lectures and in-class discussion

REQUIRED READINGS:                Customized textbook and professional and popular articles[1]

NOTE: The customized textbook and readings will consist of about 60% of “The Economics of Money, Banking, and Financial Markets (Business School Edition), 3rd edition, 2013, by (former Fed Governor) Frederick S. Mishkin and also material and articles from the professional and popular press, some recent and some not yet written.

BASIS FOR FINAL GRADE:          Homework (30%), midterm (30%), and final (40%)

 

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:

Financial institutions aren’t what they used to be. The sizes, shapes, activities, location, regulation, and risk management of banks (both commercial and investment), insurance companies, credit unions, finance companies, and other industries in the financial sector have changed greatly. Because each financial industry now tends to offer many more financial products and services and tends to be regulated and managed more like the others, the distinctions between the financial industries have diminished.

            Both for those who work in the financial sector and for everyone else—because we all use financial services and products—these large and rapid changes make learning about the financial services sector interesting and valuable. In this course we will analyze and discuss how de-regulation then and re-regulation now, technology and financial innovation always, and economic conditions intermittently have contributed to these changes in financial institutions.

The financial crisis gave us some painful answers and left us with some important, new questions. For the foreseeable future, the recent crisis changed important institutions and regulations. And, it also changed how, and how much, owners and managers of financial institutions pay attention to the measurement and management of risks. We will also see how and why the crisis changed Federal Reserve policies, both during and since the crisis.

A principal focus of the course is the how, and why, we measure and manage financial, and even non-financial, risks. In addition to financial practices, we will see how compensation policies affect risk-taking. We will see that often the main risks, their measurement, and the markets and business practices through which they are managed are often quite similar for different financial industries.

We will address how much, and why, interest rates differ across the almost-innumerable financial instruments. That discussion will help us better understand some of the risk-return trade-offs that financial institutions face. We then learn how (and how well) financial institutions measure interest rate, market, credit, liquidity, and other risks. With that in hand, we will examine how firms can and do deliberately lower (or raise!) risks with all sorts of easy-to-grasp methods.

 

BIOGRAPHICAL SKETCH: 

Jim Wilcox teaches courses on macroeconomics, on financial markets and institutions, and on risk management in financial institutions.

            He has written widely on bank lending, Federal Reserve policies, credit markets, real estate markets, credit unions, and macroeconomics.  Among other topics, his research has addressed reform of the FDIC, the effects on bank executives of mergers, the ability of banks to reduce costs following mergers, differences in bank supervision and regulation around the world, the effects of bank loan losses and capital pressures on lending and small businesses, the effects of the baby boom on house prices, how bank mergers affect small business lending differently than acquisitions do, economies of scale in credit unions, and why so many households do not have bank accounts.

            From 1999-2001, Jim was the Chief Economist at the Office of the Comptroller of the Currency, the leading U.S. banking regulator.  He has also served as the senior economist for monetary policy and macroeconomics for the President’s Council of Economic Advisers during 1990-91, and as an economist for the Board of Governors of the Federal Reserve System. Thus, his working in Washington, DC included service to one President Clinton that was sandwiched between his service to two Presidents Bush!

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[1]. The customized textbook and readings will consist of about 60% of “The Economics of Money, Banking, and Financial Markets (Business School Edition), 3rd edition, 2013, by (former Fed Governor) Frederick S. Mishkin and also material and articles from the professional and popular press, some recent and some not yet written.