The bank in financial economics

Economic framework, trends and functionning

Course objectives

  • Understand the general economic framework for banks and industry trends
  • Understand the operation of a bank and its key players
  • Understand the concept of risk and its definitions

Concepts of macroeconomics

  • Who pays for the economy? Central banks and interbank market
  • Interest rates: What are a repo rate, interest rate, LIBOR, EONIA and swaps
  • Understand the concept of risk: why an inverse relationship between price and performance?
  • Notions of economic cycles

Role, access and organization of financial markets

  • Role of financial markets: asset allocation and risk transfer
  • The increasing financialisation of the economy in figures
  • Exchanges: concentration and organization of the liquidity
  • Overview of asset classes and associated derivatives products

Introduction to the bank

  • Sources of funding
  • Role of financing the economy
  • National regulator body
  • Review of the European major banks and their specializations

Case Study: Analysis of a simplified balance sheet

Risk management: so young and already so powerful

  • Triple requirement: risk management, balance sheet management and regulatory constraints
  • The sources of risk: currency, interest rate, credit, market, operation, liquidity
  • Review of Basel 1 and 2 agreements and the Basel 3 framework

Case Study: Review of recent risk situations

Mutation of the European banks since 2007

  • 2007 brings to light the liquidity risk and dangers of leverage
  • The European crisis and the necessary reform of the European banking system

Banks and funds: between competition and dependence

  • Own account and Asset Management: when the banks were acting like funds
  • The different types of funds and their relationships with banks

Tigrane Kibarian

Tigrane Kibarian

Tigrane Kibarian graduated from ESSEC and began his career in audit at Arthur Andersen before joining General Electric, where he worked in corporate finance. He then joined Goldman Sachs in London where he was first team leader in charge of the Business Development of Equities Division. He then worked in restructuring large institutional portfolios across all asset classes. Now an independent trader, active in major index, currency and bonds markets, his broad vision of the economy and his cross – trading room and products experience give him a very practical understanding of financial markets.

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