Economics & management of financial intermediaries
The course of Economics of Financial Intermediaries intends to transfer the basic knowledge necessary for:
· analyze the structure and functioning of the financial system, understood as an organized complex of securities, intermediaries, and financial markets;
· understand the characteristics, methods of use and pricing models of the main types of financial securities;
· understand how the financial markets work;
· analyze the activities and models of economic, managerial and operational behavior of the various types of financial intermediaries;
· understand the rationale and main contents of the financial intermediation system;
correctly interpreting the relations between monetary policy impulses, the financial system and the economic system.
The learning objectives of the course can be declined as follows
· Knowledge and understanding: at the end of the course the student will have acquired the knowledge and understanding of the functioning of financial markets, the use of financial securities, and the regulatory rules to which financial intermediaries must abide in carrying out their business.
· Ability to apply knowledge and understanding: at the end of the course, the student will be able to apply the knowledge and practical skills necessary to reconstruct the process of formation of financial balances; identify and quantify the financial risks to which financial intermediaries are exposed; use derivative securities for hedging and speculative purposes; evaluate the solvency, efficiency and profitability of financial intermediaries; select and apply pricing models for financial securities.
· Making judgements: once the basic principles of the financial system have been learned, the student will be able to judge: the content of the reports published periodically by the Supervisory Authorities and the annual reports of the financial intermediaries; the behavior of financial markets with respect to systemic events or concerning individual issuers, the effects on the financial system of the decisions adopted by the ECB; the choices of companies in terms of financial structure; investment policies of financial intermediaries.
· Communication: the student must be able to use the appropriate technical terminology to communicate and interact with interlocutors who present heterogeneous degrees of knowledge on the topics covered during the course.
· Lifelong learning skills: the student must demonstrate that he has acquired the logical-conceptual tools necessary to strengthen his ability to learn in the financial field and continue his/her studies in banking and finance.
The course is aimed at students of the three-year Degree and requires that the learners have learned the basic contents of the logic of business economics. In order to maximize content learning, students should have a good understanding of the accounting and management issues of the company as they are essential to address certain topics in the exam program.
Morphological and functional aspects of the financial system; the relations between the economic system and the financial system; the process of forming financial balances; the theories of financial intermediation and the diversification processes of financial intermediaries; analysis and methodologies for measuring risks typical of financial intermediation (counterparty risks, market risks and operational risk); payment securities; debt securities; participation tools; insurance and asset management securities; derivative securities; liquidity and pricing of financial securities; the functions of the financial markets; the classification of financial markets; the efficiency of financial markets; the organizational forms and the operating phases of the financial markets; the payment services market; the money market; the bond market; the stock market; the managed savings market; the derivatives market; fundamental elements of the regulatory context; the balance of the banks; the balance sheet, economic and financial balance in the management of the banks; services and brokerage activities; the intervention of banks in securities intermediation; investment firms; asset management companies; corporate and investment banking activities; insurance companies; pension funds; the strategy and organization of financial intermediation activities; the fundamental reasons for public control over the financial system; the main regulatory sources; the Supervisory Authorities; supervisory tools; prudential regulation in credit intermediaries (Basel 1, 2 and 3); the regulation of transparency and fairness in financial intermediation; consumer protection of financial services; the European System of Central Banks; European monetary policy and its foundations; the securities of the ECB's monetary policy; the transmission mechanism in the EMU.
The course program covers the following contents:
· Fundamentals of financial intermediation: Morphological and functional aspects of the financial system; the relations between the economic system and the financial system; the process of forming financial balances; the theories of financial intermediation and the diversification processes of financial intermediaries; analysis and methodologies for measuring risks typical of financial intermediation (counterparty risks, market risks and operational risk);
· Securities and Markets: Financial securities and their classification; payment securities; debt securities; participation tools; insurance and asset management securities; derivative securities; the organizational forms and the operating phases of the financial markets; the payment services market; the money market; the bond market; the stock market; the managed savings market; the derivatives market.
The teaching activity is organized as follows:
· Frontal lessons aimed at improving students' knowledge and understanding skills and carried out with the support of both the slides and the classic blackboard; in order to strengthen communication skills and independent judgment, students are encouraged to participate in the discussion with questions, considerations and reflections.
· Tutorials: aimed at training applicative skills and problem solving. The exercises focus on a variety of topics: pricing of financial securities, use of derivative securities for speculative and hedging purposes, analysis of financial balances, measurement of risks, assessment of the profitability, solvency and efficiency of financial intermediaries.
· Contact with the market: practitioners (analysts, trading experts, exponents of the credit intermediation sector) are invited to enrich the contents of the course by bringing their professional experience to the classroom.
· Individual study: students integrate the knowledge and skills acquired in the classroom with the individual study of the textbook and the reading of in-depth documents reported by the teacher in order to favor autonomous learning abilities.
Nadotti L., Porzio C. Previati D., Economics of Financial Intermediaries, Third Edition (2017), Mc Graw Hill.
Acquisition of fundamental knowledge takes place with a written exam that covers 6 open questions on the entire exam program. The evaluation of the candidate will focus on an analysis about the use of an appropriate technical language, the autonomy of judgment and the deepening of the arguments.