After completing the course Financial Regulation the student is able to:
- Name and explain the responsibilities of different regulatory bodies and agencies in the Netherlands, the EU and the US;
- Explain the market failure in financial services due to adverse selection and the need for financial regulation;
- Explain the market failures in the insurance industry and the need for insurance regulation;
- Explain the market failures with regard to insider and rogue traders and the need for regulation;
- Explain the risk of inappropriate incentive schemes and the need to regulate them;
- Explain the causes of financial panics and crises and the potential for regulation to prevent and lessen their impact.
|This course introduces the theory of financial market failure and regulation by integrating modern theories of asymmetrical information into the analysis of financial institutions. It provides reasons for financial market failure and the rationale for financial regulation. The course offers an understanding of the structure of the markets for fund management, insurance, capital, and banking services and how these institutions interact with, and affect, the wider economy under different regulatory regimes. It enables an informed assessment of the current regulatory regime within and across countries (global regulators) with a focus on current regulation in Europe and the USA.|
Students should have a basic understanding of the banking sector, the mechanisms of and institutions in financial markets, and financial instruments. Students should have basic knowledge of economics and finance (microeconomic modelling, game theory and statistical/econometric methods). This knowledge is required foreknowledge. Willingness for self study is required.
Written exam. Homework (written assignments). Presentations. Partial grades do NOT remain valid. Students have to re-do the entire course. Partial grades only count for the first exam.
Understanding of the structure and economics relevant for regulation of markets for fund management, insurance, capital, and banking services. Understanding how relevant institutions interact with, and affect, the wider economy under different regulatory regimes. Informed assessment of the current regulatory regime within and across countries (global regulators) with a focus on current regulation in Europe and the US.|
Introduction and Background
• Regulation in the Netherlands, the EU and the USA
• Adverse Selection
• Insurance markets
• Insider Information
• Market for Control
• Incentive Systems and Risk
• Bank runs and financial crises
• Capital requirements
• Behavioral financial regulation
• Shadow Banking Regulation
• Macro-Prudential regulation
Course structure preliminary may be subject to changes.