RMRR 699: Financial Markets, Risk Management, and the Regulatory Environment Report a Broken Link
This course will introduce several types of financial markets and institutions and the way they function. Financial markets, such as the stock market, bond market, money market, and mortgage market, are where savings by households, businesses, and government are transferred to people who have a shortage of funds but are able to put their borrowings to productive uses. Financial institutions, such as chartered banks, credit unions, investment banks, mutual funds, and finance companies, act as a bridge between the savers and the end borrowers. This course will explain how such institutions manage risk with different types of assets that can be bought and sold in financial markets, a large majority of them being both within and across national borders. It will also introduce the roles of the central bank and the types of tools it can use to stabilize financial markets and the economy; the regulatory environment within which financial transactions take place; how prudential regulation constrains chartered banks and other financial institutions from taking excessive risks and, thus, controls the level of risk in the whole financial system; and what can be done to improve the regulatory environment without having significant negative impacts on the incentives for business. The course will also explain the most common drivers of financial crises and the role of prudential regulation in averting such crises.