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IBF601 Microeconomics of Banking

This course presents the modern theory on microeconomic foundation of banking. The topics to be covered include the roles of banks (such as liquidity insurance, information sharing coalition, and delegated monitoring, etc.), optimal contracting between lenders and borrowers, credit rationing, industrial organization approach to banking, bank runs and systemic risks, the need for a central bank, deposit insurance, and so on. Emphasis will be given to applying to banking the concepts and theories developed over the last twenty years in the field of economics of information and contract.