This module aims to provide students with a quantitative toolkit to explore the economics of banking from both microeconomic and macroeconomic viewpoints. By delving into the unique characteristics of banks as firms, their pivotal role in the economy, and the regulatory frameworks governing them, students will acquire a comprehensive insight into the banking sector. The module aims to establish a solid economic foundation, underscoring the sector's crucial importance to the macro-economy. Through a quantitative approach, the module will introduce various banking topics, enabling students to analyse the banking sector's impact on broader economic dynamics.

(LO1) Students will be able to analyse the role and characteristics of banks in an economy through the lens of economic models.

(LO2) Students will be able to analyse the competitive environment banks operate in.

(LO3) Students will be able to explain the main risks that banks face, such as credit, liquidity, and interest rate risks, and incorporate them into models to quantify the adverse outcomes of these risks.

(LO4) Students will actively learn how to apply theoretical concepts and banking principles, such as adverse selection and bank runs, in microeconomic or macroeconomic applications.

(LO5) Students will gain insights into the main systemic risks and will be able to explain why and how banks are regulated.

(LO6) Students will be able to articulate and debate the macroeconomic role of the banking system and the implications of distortions in this role.

(S1) Problem solving skills
Students will tackle complex banking issues, learning to analyse and propose solutions to problems ranging from individual bank operations to systemic financial risks.

(S2) Adaptability
By studying the evolving banking sector dynamics, including shifts in regulatory environments and economic conditions, students will learn to adapt their strategies and approaches effectively.

(S3) Numeracy
Engagement with quantitative models, financial data analysis, and economic statistics throughout the module enhances students' numeracy skills. These activities develop their ability to work with numbers and interpret data effectively, a fundamental aspect of banking and finance.

(S4) Commercial awareness
The module provides an in-depth look into the banking sector’s role within the broader economy, helping students understand market trends, financial products, and the impact of economic policies on banking operations. This builds a solid foundation of commercial awareness.

(S5) Teamwork
Through collaborative learning exercises and seminar assignments, students will develop teamwork skills and merge diverse perspectives and skills to analyse contemporary banking issues.

(S6) Organisational skills
Organising information, managing seminar assignments, and structuring solution approaches are integral parts of the module's learning process. Students develop these organisational skills through structured assignments and case studies.

(S7) Communication Skills
Discussions on banking theories, regulatory frameworks, and economic impacts will develop students' ability to articulate complex ideas clearly and effectively, both in writing and verbally.

(S8) IT Skills
Utilising banking databases and statistical tools within the module equips students with essential IT skills relevant to modern banking and economic analysis.

(S9) International awareness
Exploring international banking operations, cross-border regulatory policies, and global economic trends will expose students to the international financial landscape, preparing them for a globalised banking environment.

(S10) Lifelong learning skills
Students learn to critically analyse both historical and current banking issues, along with their effects on the wider economy.

(S11) Ethical awareness
Discussions on banking ethics, corporate social responsibility, and regulatory compliance foster ethical awareness. Students will learn to evaluate the moral implications of banking practices and the importance of ethical decision-making in financial activities.

2 hour lecture x 10 weeks
1 hour seminar x 5 weeks
125 hours self-directed learning

Part I: Microeconomics of banking:

What is a bank and what do banks do?;

Financial intermediation;

The banking firm;

The banks as a portfolio manager;

Banking risks and risk management;

Credit rationing.

Part II: Macroeconomics of banking:

Liquidity insurance;

Bank runs and systemic risk;

Macroeconomics of banking;

Bank regulation.