8196 Comparative financial systems

8196 Comparative financial systems 20264 Comparative financial systems Prof. Marco Onado Academic Year 2010-2011 The course main objectives can be summarised as follows: , Review the conceptual framework for analysing the role of financial systems and comparing them across countries and over time, in particular looking at the main channels of intermediation: banks vs financial markets. , Discuss the current problems of the international financial system. In particular, a large section will be devoted to the causes and implications of the crisis that began in June 2007 and which will shape the evolution of the global financial system in the foreseeable future. , Look at the various issues both at the macro and the micro level: from this point of view we will discuss the main implications for the business models of the main global intermediaries: universal banks vs. local banks; asset managers etc. These topics will also be discussed in special guest lectures with international experts. The course aims to aid students to identify and discuss the main problems that financial intermediaries face when operating in different economic and historical conditions, instead of analyzing country by country the institutional differences that still exist. We will try to answer questions such as: what are the main characteristics of a financial system and how can they be measured? Why structural characteristics differ across countries and over time? Why some financial systems (e.g. the US and the UK) were hit so hardly by the crisis, while others (e.g: Italy and Spain) are still almost unscathed? What is the outlook at the beginning of 2011 for the main European banks? What does that mean from the point of view of strategic decisions of financial intermediaries which want to be international or global? The course is divided in four parts, devoted to: , General issues (role of the financial system; literature on comparing financial systems); , Anatomy of a crisis (the effects on main financial systems and the main causes of the crisis); , The main weaknesses from a macro and a micro point of view; , The strategic issues for the main global players. 1 In each lecture a large room is devoted to real and current problems. In the 2006-2007 course for instance, one of the first lectures was devoted to discuss the dangers to financial stability deriving from the extraordinary increase of debt in general and American households’ debt in particular. In the past year, we have discussed almost day by day the rescue of the main global banks and the evolution of the crisis. To reach the general objectives, attendance is very important and an active attitude on the part of students will be encouraged. Students are strongly advised to get familiar with the main international newspapers and magazines such as: “The Economist”, “Financial Times”, “The Wall Street Journal”. Valuation will be based on a final written test: 6 multiple choice questions (2 point each); 2 open questions (10 points each); 30cum laude if sum>30 Time: 70 minutes. Individual essays (as a part or alternative to the final test) can be assigned to attending students. Questions will concern topics dealt with in documents listed in the “reference” column below and in the lectures’ slides. Documents listed under the “documents for further analysis” can be helpful to understand the slides. All documents will be available on the weblearning space You@B, teacher’s personal page. Also links to documents for further analysis will be available. Lectures will be held on Monday (14.30-16.00, Classroom 11) and Wednesday (8.45-10.15, Classroom 23). nd floor, Room D2-09 (ext. 5865) and at marco.onado@unibocconi.it Marco Onado is available on Wednesday 10.30-12.00, 1 via Roentgen, 2 2 Course schedule general theme Topic Reference Documents for further analysis # date The functions of a financial system. Mon, The main data on the size and 1 Feb 14 composition of the global financial system Comparing financial approach: a Wed, 2 functional perspective Feb 16 Notes on functions Market-based vs bank-based Mon. Financial structure: Adrian-Shin New financial intermediation 3 systems and securitisation Feb21 general issues processes Household savings and debt McKinsey Global Institute, Farewell to Wed cheap capital? The implications of 4 Feb 23 long-term shifts in global saving and investment Banking structures with particular ECB Banking structures Mon. 5 reference to the EU Feb 28 The global financial imbalances: Wed the major countries’ current 6 Mar 2 account deficits and sectoral financial accounts The making of a series of financial Bank of England, Credit booms Mon Bank of England, Global imbalances and 7 bubbles: 1997-2007 Mar 7 the financial The shadow banking system Tucker, Shadow banking system Wed Crisis, Quarterly Bulletin 2009 Q3 8 FRBY, Shadow banking Mar 9 M.King, Sudoku for economists Anatomy of a crisis IMF Global Financial Stability Report, The bursting of the bubble and “the Gary Gorton: Slapped by the Invisible Mon October 2010, Chapter 2 9 black swan” Hand; Taylor-Willias, A Black Swan in Mar 14 the Money Market; The liquidity problem and the Wed 10 funding of banks Mar 16 Mon Lessons to be learnt in liquidity risk IMF Global Financial Stability Report, Mar 21 11 management October 2010 3 The crisis spreads from the banks Wed 12 to the sovereign Mar 23 The weaknesses of the Aschcraft-Schuremann Understanding securitisation process the securitisation of subprime mortgage Mon credit 13 mar 28 See also IMF GFSR oct 10 on the role of rating agencies What do banks do? Why do credit Adair Turner booms and bust occur? Paul Woolley Wed Both in Future of finance 14 Mar 30 www.thefutureoffinance.org.uk The main weaknesses: micro and macro What is the contribution of the Andrew Haldane in the future of finance Fender Mitchell, The future of financial system: miracle or securitisation: how to align incentives?, Wed mirage? BIS QR 09 15 Apr 27 Bank of England, Financial Stability Review December 2009, Box 1 The big regulatary arbitrage Guest lecture Mon Antonio Foglia 16 May 2 Large Complex Financial Wed 17 Institutions and the crisis May 4 LCFI and systemic risk: the need Mon for a macro level of supervision 18 Excerpts from Imf, Ecb, BoE and Bank May 9 of Italy Stability reports The crisis and the Beyond Roe strategic issues for Wed 19 main global players May 11 Ecb, Beyond Roe The role of hedge funds The new Basel agreement Mon Guest lecture May 16 20 Mr. Luca Anzola Gestielle Alternative 4 The problem of proprietary trading Oecd, The elephant in the room: what Wed should banks do 21 May 18 FSA Discussion paper The future of Asset management Guest lecture Mr. Giordano Lombardo Mon Pioneer Investments 22 May 23 Spring 2011: Where are we now? Wed Discussion of the lastest reports from the 23 May 25 Imf and other international bodies Mon Wrap-up session 24 May 30 NB: full reference to the documents listed in the last two columns above will be provided in the lectures’ slides 5