Acerca de este curso: Capital markets and financial institutions are all around us. This is an enormous industry in which powerful players oftentimes challenge investors and the public at large and expose them to significant risks. This Course provides for the deep understanding of the core ideas, concepts, and mechanisms of the modern capital market in a learner-friendly way. We will analyze the market’s most fundamental problems, realize the intrinsic interests of the market participants, reveal the true meaning of certain financial terms, and uncover credible signals of the likely behavior of economic agents – all that with little math and a lot of fun. The learners will be much better positioned with respect to the financial environment. They will see through the financial news, reveal the risks of the financiers’ wishful thinking promises, and protect themselves against dangerous adventures. The learners will get the opportunity to use the obtained knowledge, skills, and understanding for the successful professional career in the financial and other business areas, as well as in their day-to-day life.
Para quién es esta clase: The Course is designed for a wide audience of those interested in finance either professionally or just of curiosity. The audience includes managers of different levels – from top to line – specializing in finance, accounting, business planning, strategy, consulting, and project management. It will be of interest to the IT specialists engaged in the area of finance, fin-tech, big data, valuation etc. The Course might also add value to the students and instructors, as well as to anyone willing to better understand the activities of financial institutions, the opportunities and risks associated with financial instruments.
Creada por: Moscow Institute of Physics and Technology, American Institute of Business and Economics
Enseñado por: Konstantin Kontor, Director and Professor of Finance and Strategy
American Institute of Business and Economics (AIBEc)
| Información básica | Curso 1 de 5 en Understanding Modern Finance Specialization |
| Nivel | Intermediate |
| Idioma | English |
| Cómo aprobar | Aprueba todas las tareas calificadas para completar el curso. |
Programa
SEMANA 1
Perfect Capital Markets. Problems Caused by Private Information
In Week 1 we propose the set of assumptions and the framework of our discussion. We will discuss perfect capital markets and see how the deviations from this idealized model that are observed in our real life result in the demand for financial intermediation and for the services of financial institutions.
We will discuss the fundamental problems caused by the existence of private information (moral hazard и adverse selection) and the damage they lead to. Based on the most simplistic models you will be able do delve deeper into the core of these problems and to evaluate their potential scale. You will learn what role the moral hazard plays in insurance, and how the adverse selection and moral hazard problems reduce the efficiency of lending.
12 videos, 6 lecturas, 1 cuestionario de práctica
- Leyendo: Konstantin Kontor
- Leyendo: AIBEc. The American Institute of Business and Economics
- Leyendo: Grading
- Leyendo: Handouts – an important comment
- Vídeo: 1.1. Introduction – perfect capital markets
- Vídeo: 1.2. Demand for the financial intermediation
- Vídeo: 1.3. Model of private information – key assumptions
- Vídeo: 1.4. Model of moral hazard
- Vídeo: 1.5. Co-insurance as a market solution to the moral hazard problem
- Vídeo: 1.6. Moral hazard in insurance (1) – a more advanced model
- Vídeo: 1.7. Moral hazard in insurance (2) – incomplete insurance
- Vídeo: 1.8. Model of adverse selection
- Vídeo: 1.9. Adverse selection in credit markets (1) – expected cash flows to the bank
- Vídeo: 1.10. Adverse selection in credit markets (2) – credit rationing
- Vídeo: 1.11. Moral hazard from increasing interest rates
- Leyendo: 1.1. Why do financial institutions exist?
- Leyendo: 1.2. Problems caused by private information
- Cuestionario de práctica: 1 (Practice)
Calificado: 1 - Moral hazard, adverse selection, and the adventures of the greedy monopolist bank
SEMANA 2
ALLEVIATION OF MORAL HAZARD – DEBT AND EQUITY CONTRACTS. BANKS (1) – DIVERSIFICATION AND MONITORING
In Week 2 we will consider certain ways of overcoming problems caused by private information and evaluate them. We will know why some methods work while others don’t, and why. You will learn the core differences between equity and debt financing, study debts contracts with liquidation and see the core inefficiency of that kind of a debt contract.
Based on a simple model you will study diversification and delegated monitoring and see how they contribute to the efficiency of lending. We will find out how a bank emerges as a key financial intermediary responsible for asset monitoring. You will be able to see why the bank can make money and to calculate its profit in different cases. At the end of Week 2 we will pose a fundamental question: How does the bank attract depositors?
7 videos, 2 lecturas, 1 cuestionario de práctica
- Vídeo: 2.2. Debt contract with liquidation (DCL) as a means of alleviation of moral hazard. The inefficiency of DCL
- Vídeo: 2.3. Monitoring as a universal and efficient way of overcoming unobservability
- Vídeo: 2.4. Multiple lenders (1) – the model
- Vídeo: 2.5. Multiple lenders (2) – bank contracts
- Vídeo: 2.6. Delegated monitoring (1) – the interaction of the parties and bank’s profit
- Vídeo: 2.7. Delegated monitoring (2) – banks’ vulnerability to runs
- Leyendo: 2.1. Alleviation of moral hazard – debt and equity contracts
- Leyendo: 2.2. Diversification and the feasibility of delegated monitoring
- Cuestionario de práctica: 2 (Practice)
- Cuadro de aviso de la discusión: Open Question 1
Calificado: 2 - Debt contracts and the anatomy of bank financing
SEMANA 3
Banks (2) – Asset Transformation and Liquidity Creation. Banks’ Vulnerability with Respect to Runs
Week 3 of the Course is devoted to the analysis of creation of liquidity – namely, we do answer the question of how a bank attracts depositors. You will get introduced to asset transformation and will learn how the presence of banks in capital markets makes the money circulation in the economy more efficient. You will analyze the market participants’ preferences and the “safety cushion” of a bank.
We will study the mechanism of bank runs and feel how vulnerable the bank is with respect to runs. You will learn what methods of fighting bank runs have been used in centuries, and realize why the role of government in regulating of the banking business is so important. We will discuss deposit insurance as a universal and effective mechanism of preventing runs.
8 videos, 2 lecturas, 1 cuestionario de práctica
- Vídeo: 3.2. Liquidity creation (1) – the model of liquidity
- Vídeo: 3.3. Liquidity creation (2) – the mechanism
- Vídeo: 3.4. Banks’ vulnerability with respect to runs
- Vídeo: 3.5. Ways to fight bank runs (1) – suspension of convertibility
- Vídeo: 3.6. Ways to fight bank runs (2) – deposit insurance
- Vídeo: 3.7. Problems of deposit insurance
- Vídeo: 3.8. Deposit insurance and the need to regulate
- Leyendo: 3.1. Banks – illiquid asset transformation
- Leyendo: 3.2. Banks – creation of liquidity and bank runs
- Cuestionario de práctica: 3 (Practice)
- Cuadro de aviso de la discusión: Open Question 2
Calificado: 3 - Asset transformation – “black boxes” and “red triangles”
SEMANA 4
Bank Regulation and Reform. Payment Services. Mobile Banking. Bank 3.0
Week 4 of the Course consists of two parts. The first part is devoted to the discussion of challenges and development of banking regulation. We consider the S&L market crash of the 1980’s as a trigger to the initiation of the worldwide regulatory movement. You will get introduced to the Basel process as the basis of the modern bank regulation.
The second part of Week 4 shifts focus somewhat. We will talk about the payment services that are tantamount to banking for the majority of population, at least in the developed world. We will discuss how the fast development of IT technologies, the Internet and the social media influences banking business. But we will see that the most important functions of banking – asset monitoring and liquidity creation – do not disappear but take a new shape. At the very end we will drop a few words about private banking – a very specific area of banking services for high net worth individuals.
8 videos, 1 lectura, 1 cuestionario de práctica
- Vídeo: 4.2. The S&L crisis of the 1980’s. Zombie S&L’s. The sources and reasons of bank regulation
- Vídeo: 4.3. Bank regulation (1) – nature, goals, and importance
- Vídeo: 4.4. Bank regulation (2) – mechanism. The Basel Accords
- Vídeo: 4.5. Payment services – history, development, and technology
- Vídeo: 4.6. Mobile banking (1) – technology and services. Bank 3.0
- Vídeo: 4.7. Mobile banking (2) – loans and monitoring at Bank 3.0
- Vídeo: 4.8. Private banking. Mobile banking and traditional banking – from conflict to synergy
- Leyendo: 4. Bank regulation and reform – an overview of articles
- Cuestionario de práctica: 4 (Practice)
- Cuadro de aviso de la discusión: Open Question 3
Calificado: 4 - From the Great Depression to Bank 3.0
SEMANA 5
Public Investments and Investment Banking
Week 5 of the Course is devoted to public investments and investment banking. We consider the major activities of investment banks – underwriting, trading, consulting, and financial innovation. We study the details of underwriting and the core reasons for underpricing as an important phenomenon that determines the observed behavior of market participants in the process of financing.
We also discuss the mechanism of market bubbles and crises as well as the role of investment banks and other financial institutions in the crisis development. That sets the background for the idea of regulation of investment banks.
11 videos, 3 lecturas, 1 cuestionario de práctica
- Vídeo: 5.2. Public capital markets. The demand for investment banking services
- Vídeo: 5.3. What do investment bankers do?
- Vídeo: 5.4. Winner’s curse – a model of private information in underwriting. Underpricing
- Vídeo: 5.5. Underwriting – private information, underpricing, and the empirical evidence
- Vídeo: 5.6. Underwriting (1) – the mechanism
- Vídeo: 5.7. Underwriting (2) – the services of an investment bank in the era of global equity markets
- Vídeo: 5.8. Trading and market support
- Vídeo: 5.9. Research and innovation
- Vídeo: 5.10. Bubbles and crises – an overview
- Vídeo: 5.11. Regulation of investment banking
- Leyendo: 5.1. What is investment banking – an overview
- Leyendo: 5.2. Winner’s curse
- Leyendo: 5.3. Investment banking – questions and answers
- Cuestionario de práctica: 5 (Practice)
- Cuadro de aviso de la discusión: Open Question 4
Calificado: 5 - Investment banking practices
SEMANA 6
СМО and the 2008 World Financial Crisis. The Ascent of Moral Hazard. Globalization. Wrap-Up. Some Positive Messages
Week 6, the final week of the Course covers securitization and CMO’s. We will reveal the role of the CMO market in the development of the world financial meltdown that peaked in 2008 and, as many believe, is not yet over. We will study the details of the role of CMO’s in the development of the crisis. We will consider the measures taken by the regulators, the “too big to fail” phenomenon, and will understand why the governments so actively helped the biggest international investment banks found to have been on the verge of bankruptcy. We will also talk about the globalization of capital markets and the first signals of a counter-trend – de-globalization. We will clearly see how modern geopolitical and technological trends contribute to the ascent of moral hazard that is now a global problem. Finally, some clear and useful recommendations are provided. As a result, you will be able to successfully apply the obtained knowledge and skills not only in finance but also in your career and life in general.
9 videos, 1 lectura
- Vídeo: 6.2. CMO – the mechanism, cash flows, and risk
- Vídeo: 6.3. CMO and the crisis (1) – the market, mortgage brokers, and substandard mortgages
- Vídeo: 6.4. CMO and the crisis (2) – securitization, CMO tranches, credit rating and insurance, SPV. Toxic assets
- Vídeo: 6.5. “Too Big to Fail”
- Vídeo: 6.6. Globalization in capital markets and its challenges
- Vídeo: 6.7. What has been done to fight the crisis? New regulation, QE, negative interest rates
- Vídeo: 6.8. The first signs of “de-globalization”. Brexit. Problems and challenges
- Vídeo: 6.9. Wrap-up and conclusions. Positive messages and practical advice
- Leyendo: 6. The rise and the crash – the CMO Story
- Cuadro de aviso de la discusión: Open Question 5
- Cuadro de aviso de la discusión: Open Question 6
Calificado: Final Test
Calificado: Analysis of liquidity creation by a bank
Preguntas Frecuentes
Cómo funciona
Trabajo del curso
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Certificados
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Creadores
Moscow Institute of Physics and Technology
Московский физико-технический институт (неофициально известный как МФТИ или Физтех) является одним из самых престижных в мире учебных и научно-исследовательских институтов. Он готовит высококвалифицированных специалистов в области теоретической и прикладной физики, прикладной математики, информатики, биотехнологии и смежных дисциплин. Физтех был основан в 1951 году Нобелевской премии лауреатами Петром Капицей, Николаем Семеновым, Львом Ландау и Сергеем Христиановичем. Основой образования в МФТИ является уникальная «система Физтеха»: кропотливое воспитание и отбор самых талантливых абитуриентов, фундаментальное образование высшего класса и раннее вовлечение студентов в реальную научно-исследовательскую работу. Среди выпускников МФТИ есть Нобелевские лауреаты, основатели всемирно известных компаний, известные космонавты, изобретатели, инженеры.
American Institute of Business and Economics
The American Institute of Business and Economics (AIBEc) offers a wide variety of business courses in finance, accounting, marketing, strategy, HR, business law, economics, general management, business psychology, as well as course projects and the Field study. AIBEc provides for flexibility and customization of programs and schedules.
Tarifa
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