Course Number: PSU-FIN 401
Course Name: FINANCIAL INSTITUTIONS
Number of Credit Hours: 3 Credits
Corequisite(s):
N/A
Course Description:
This course analyzes the role of financial institutions in allocating resources, managing risk, and exerting corporate governance over firms. The class begins by studying interest rate determination, the risk and term structure of interest rates, the pricing of bonds, and how to manage interest rate risk. Special attention is given to the role of central banks in influencing interest rates. Next, the class uses economic principles to examine the emergence and impact of financial institutions on economic growth, income distribution, and financial stability. The class studies conflicts of interest in financial intermediaries, and extensively assesses the economics of regulation and the political forces shaping policy decisions. Besides familiarizing students with the operation and management of banks, mutual funds, insurance companies, pension funds, and investment banks, the class uses the economics of information to understand the functioning of financial institutions. An international perspective is stressed. Examples from countries with different legal, political, and regulatory regimes provide a richer understanding of the role of financial institutions than is possible by studying any single country.
