Banking and Financial Institutions: Theory and Evidence, jointly with Swiss Finance Institute

This five-day PhD level mini course offers an in-depth treatment on the academic literature in banking. The syllabus will include a wide range of topics in banking, in the context of financial institutions and its roles in macroeconomics. Both theory and empirics will be covered by this course.

The course will start with traditional banking models, which will be organized and taught via two camps: Liability side modelling, such as Diamond and Dybvig (1983, Journal of Political Economy), Calomiris and Kahn (1991, American Economic Review), Homlstrom and Tirole (1997, Quarterly Journal of Economics), and Diamond and Rajan (2001, Journal of Political Economy), etc.; and Asset side modelling, such as Diamond (1984, Review of Economic Studies), DeMarzo and Duffie (1999, Econometrica); etc.

The course will also cover more recent progress of modeling of banks as modern financial institutions, especially their role in context of macroeconomic dynamics; for instance, He and Krishnamurthy (2013, American Economic Review) and Brunnermeier and Sannikov (2014, American Economic Review). Some preliminary preparation of continuous-time analysis will be provided.

The third part of the course will cover empirical literature on banking. The topic includes, but is not limited to, US banking deregulation (e.g. Krosner and Strahan, 1999, Quarterly Journal of Economics); shock transmission in the international context (e.g. Peek and Rosengren, 2000, American Economic Review); the impact of banking shocks to real sector (e.g., Kwhaja and Mian, 2005, Quarterly Journal of Economics); and various recent empirical literatures on 2007-2009 US Great Recession and European crisis.