STATE UNIVERSITY OF APPLIED SCIENCES IN KONIN
Course title
European Banking and
Finance after the Crisis
2008
II-III
Field of study
Finance and Accounting
Semester
Spring
Language of
instruction
English
Teaching methods
Number of
contact hours
30
ECTS credits
Lecture, Power Point
Presentation,
Discussion/debates,
Cooperative teaching,
Problem-based learning
(PBL),
Heuristic
method, Case study,
Explanatory
method,
Activity-oriented
teaching,
Practical
methods
6
Year of study
Name of lecturer
dr hab. Magdalena Zioło
Objectives of the course (expected learning outcomes and competences to be acquired)
This course aims to highlight the important role that regulations have come to play
when managing the risks of financial institutions. In this regard, the Basel Accords will
be discussed in detail, with special attention paid to credit risk, market risk, and capital
adequacy under Basel II and Basel III. The course will also look at major regulations
that are having an impact on the management of financial institutions in the EU.
Upon successfully completing the course, students should:
1) understand the mechanisms of the financial crisis of 2008, financialization, and
its consequences;
2) be able to define the “seven deadly sins of banks,” which drove the financial crisis
of 2008;
3) have knowledge of the European Banking System, European Financial
Supervision, and the changes made to it after the financial crisis of 2008;
4) have a sound understanding of the tools that financial institutions use to manage
various risks (especially liquidity risk, insolvency risk, and bankruptcy risk) and
their applications in the context of evolving regulations;
5) be able to explore and explain the risks modern financial institutions face in the
condition of financialization; and
6) be able to define and understand the tools and mechanisms mitigating financial
risk.
Course contents
The course focuses on the problem of the banking and financial system’s safety and
stability in the European Union (EU, especially the Eurozone) after the financial crisis of
2008. After the financial crisis of 2008, the importance of safety and stability for
financial institutions has increased because of the numerous bailouts that many states
STATE UNIVERSITY OF APPLIED SCIENCES IN KONIN
across the globe have encountered. Since 2008 banks have been at the heart of
discussions about efficient regulations and ways of mitigating insolvency and
bankruptcy risk. The European Union is still suffering from the consequences of
insufficient supervision under the old financial system and its institutions. In response to
the financial crisis, many new institutional measures, mechanisms, and instruments have
been adopted. After the financial crisis of 2008, the main questions have been: what is
the role of banks in the economy today and has the banking profession become
distorted? Many banks preferred to speculate rather than finance households and
companies in the past, which is obvious after analyzing the pre-crisis main indicators,
such as loans and financial assets as a proportion of total assets. Taking into
consideration the bailouts and the way banks have been managed so far, the vital part of
the discussion is concentrated on: the problem of state aid (subsidies and financial aid
for banks and other institutions from the state budget), wage divergence in the banking
and financial sector (greed), and the activity of banks in so-called tax havens. All of
these factors are crucial facets of the old banking and financial system and were
responsible for its malfunction. Taking new steps toward making reforms will improve
the system and enhance the efficiency of risk management, supervision, and control of
financial institutions across Europe. Many improvements and regulations have already
been implemented while some are still in progress (e.g., the European Banking Union).
Regulatory responses to the financial crisis after 2011 have focused on the new concept
of the European System of Financial Supervision (ESFS), which has operated for three
years so far. There are also other mechanisms and solutions such as Basel III
(CRD/CRR package), the European Banking Union, and the European Stability
Mechanism (ESM) and safety net. There are also concepts worth mentioning that are
not strictly connected to banking and financial sector regulations but are important for
the stability of the public finance system of a European Union member state (especially
those belonging to the Eurozone). Some examples are the Stability and Growth Pact, the
Six Pack, the Two Pack, and the European Semester. The general goal of the course is to
discuss the key factors responsible for the financial crisis of 2008, to point out the main
changes and challenges in banking and financial sector regulations before and after the
crisis, and finally, to present and consider the new regulations and solutions proposed in
response to the financial crisis of 2008.
Assessment methods
Power point presentation,
Test
Recommended readings
Bini Smaghi, Lorenzo (2013). Money and Banking in Times of Crisis. In: Balling,
Morten, Ernest Gnan and Patricia Jackson (eds.). States, Banks and the Financing of
the Economy: Monetary Policy and Regulatory Perspectives. SUERF studies 2013/3, pp.
31-42.
Calomiris, Charles W. und Robert E. Litan (2000). Financial Regulation in a Global
Marketplace. In: Litan, Robert E. and Anthony M. Santomero (eds.). BrookingsWharton Papers on Financial Services 2000. Washington, D.C., pp. 283-323.
Coeuré, Benoît (2013). The Single Resolution Mechanism: Why it is needed. Speech at
the ICMA Annual General Meeting and Conference 2013, Copenhagen, 23 May 2013.
Council of the European Union (2013). Council agrees position on bank resolution.
Council Press Release 11228/13 of 27 June 2013.
STATE UNIVERSITY OF APPLIED SCIENCES IN KONIN
Speyer, Bernhard (2011). Financial supervision in the EU – incremental progress,
success not ensured. Deutsche Bank Research. EU Monitor 84. Frankfurt/Main.
Beck, Thorsten (editor), Banking Union for Europe: Risks and Challenges, VoxEU Ebook, Center for European Policy Research, October 15, 2012
Others regarding to lecturers recommendation