Topics in Financial Economics
The financial crisis that erupted in 2007 and stills goes on has demonstrated the central importance of recognizing the multiple risks facing the financial institutions (FI). These risks need to be managed appropriately. This course offers an integrated view of the management of these risks: recognition, measurement, and mitigation. Having developed the theory, we will study the deficiencies in the FIs? internal risk management systems as well as in their prudential supervision. These deficiencies led to the failure of both self-regulation by FIs as well as of prudential supervison of the financial system. We will examine solutions to the risk management problems that buffet the FIs.