A. OBJECTIVE. The goal of the course is to provide students with knowledge and understanding of the theoretical and practical tools that explain how the financial system works, as well as its interactions with the real economy, both at the macro- and micro-level, by focusing on the behavior of financial intermediaries in transferring funds from surplus units (savers) to deficit units (investors).
B. EXPECTED LEARNING OUTCOMES 1. KNOWLEDGE AND UNDERSTANDING Acquire knowledge and tools, both theoretical and practical, that allow students to understand theories of financial economics. Such knowledge will be acquired through frontal lectures supported by advanced textbooks and journal articles reading, and participation to thematic seminars.
2. APPLYING KNOWLEDGE AND UNDERSTANDING Students will be able to apply the acquired knowledge and methodology to practical examples in a way to assess the main concerns and opportunities of the modern financial system. Such skills will be developed mainly through exercises and an active debate in the classroom.
3. MAKING JUDGEMENTS Ability to identify and explain the relationships among the agents of the financial sector, as well as their interaction with the real side of the economy. Students will be able to identify, collect and interpret relevant data on the financial indicators, in connection with real variables, in order to i) provide a comparative analysis with respect to other economic indicators from a global perspective, and to ii) stimulate reflections on issues related to financial economics. Active discussions among students will be encouraged.
4. COMMUNICATIONS Students will acquire the ability to present the issues of the course with adequate language and appropriate analytical skills (formulae, graphics, and explanation of causal links). Such ability will be implemented through exercises. Students will be able to communicate with peers and supervisors about their understanding on basic topics of financial economics.
5. LEARNING SKILLS Students must be able to reconstruct autonomously the main notions of financial economics so that to undertake possible further studies with a high degree of autonomy.
1. General aspects. The financial system: markets, intermediaries, instruments, and supervisory authorities Efficiency of financial markets The link between non-financial and financial accounts: financial accounts of institutional sectors
2. Financial structure, financial development, and the real economy. “Direct” and “indirect” finance “Bank-based” and “market-based” systems Effects on economic growth
3. Theoretical analysis of agents’ choices. Intertemporal choices: decisions of savings Choices under uncertainty Expected utility theory Risk attitude Equilibrium Demand for insurance Investment in financial assets Investment in risky assets Optimal portfolio’s allocation (Markovitz) The CAPM