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EMPIRICAL BANKING

Syllabus

EN IT

Learning Objectives

LEARNING OUTCOMES:
Ability to read and understand economic/financial/banking papers
Ability to replicate the empirical part using methodologically correct approaches.

KNOWLEDGE AND UNDERSTANDING:
Understand a theoretical problem and empirical analysis. Understanding, memorization, and reproduction of formulas.

APPLYING KNOWLEDGE AND UNDERSTANDING:
Use practically knowledge of banking economic theory and econometrics to solve research questions in banking.

MAKING JUDGEMENTS:
Ability to evaluate empirical work, recognizing strengths and weaknesses. Identify the limits of previous analyses, propose how to improve them, try to apply your ideas by evaluating the results obtained.

COMMUNICATION SKILLS:
Ability to illustrate, in English, the research question, the econometric methods used and the results obtained with specific technical language. Ability to answer questions on topics.

LEARNING SKILLS:
Ability to set a research demand, constructive critique to existing literature, use of econometric software and statistical techniques.

Prerequisites

Intermediate-level knowledge of microeconometrics and banking intermediaries.

Econometrics prerequisite:
Basic knowledge of econometric analysis, including linear regressions, dummy variables, interaction terms, and variable transformations (e.g., logarithms).
Suggested textbook: Introduction to Econometrics, James H. Stock and Mark W. Watson, updated third edition, Pearson Education Limited, 2015.
Recommended chapters: Ch. 1 (Sections 1.2, 1.3); Ch. 3 (Sections 3.1, 3.2, 3.3, 3.4, 3.7); Ch. 4; Ch. 5 (Sections 5.3, 5.4); Ch. 6 (Sections 6.2–6.7); Ch. 8 (Sections 8.2, 8.3).

Banking and Financial System Prerequisites:
Basic knowledge of the functioning of the financial system and, in particular. the banking system.
Suggested textbook: R.W. Melicher, E.A. Norton. "Introduction to Finance - Markets, Investments, and Financial Management" (16th edition), Wiley.
Recommended chapters: Ch 1-3.

Program

• Presentation of the course (1 hr).
• The theory of financial intermediation (6 hrs).
• Market-based vs bank-based economies (3hrs).
• Finance and growth (11 hrs).
• Islamic banks (9hrs).
• Introduction to the general characteristics of the M&A operations (6hrs).

Practical sessions aimed at estimating the theoretical models presented during lectures will also be conducted.

Books

Two suggested textbooks are recommended (not mandatory).
1. Microeconometrcis of Banking - Methods, Applications, and Results. H. Degryse, M. Kim, S. Ongena. Oxford University Press 2009.
2. Modern Banking. S. Hefferman. John Wiley & sons, 2005.

Bibliography

Allen, F., and Gale, D. (1995). A welfare comparison of intermediaries and financial markets in Germany and the US. European Economic Review, 39, 179-209.
Beck, T., Levine, R., and Loayza, N. (2000). Finance and the Sources of Growth. Journal of Financial Economics, 58, 261-300.
Beck, T., Demirgüç-Kunt, A., and Merrouche, O. (2013). Islamic vs. conventional banking: Business model, efficiency and stability. Journal of Banking & Finance, 37, 433-447.
Caiazza, S., Pozzolo, A.F. (2016). The determinants of failed takeovers in the banking sector: Deal or country characteristics?. Journal of Banking & Finance, 72, S92-S103.
DeYoung, R., Evanoff, D.D., and Molyneux, P. (2009). Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature. Journal of Financial Services Research, 36, 87-110.
Faccio, M., and Masulis, R.W. (2005). The Choice of Payment Method in European Mergers and Acquisitions. The Journal of Finance, 60, 1345–1388.
King, R.G., and Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right. The Quarterly Journal of Economics, 108, 717-737.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny, R.W. (1998). Law and Finance. Journal of Political Economy, 106, 1113-1155.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny, R.W. (2008). The Economic Consequences of Legal Origins. Journal of Economic Literature, 46, 285-332.
Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35, 688-726.
Levine, R., and Zervos, S. (1998). Stock Markets, Banks, and Economic Growth. The American Economic Review, 88, 537-558.
Martynova, M, and Renneboog, L. (2008). A Century of Corporate Takeovers: What Have We Learned and Where Do We Stand? Journal of Banking & Finance, 32, 2148-2177.
Rajan, R.G., and Zingales, L. (1998). Financial Dependence and Growth. American Economic Review, 88, 559-586.
Stiglitz, J.E., and Weiss, A. (1981). Credit Rationing in Markets with Rationing Credit Information Imperfect. The American Economic Review, 71, 393-410.

Teaching methods

Lectures.
Tutorials.
Optional individual take-home exercises with no formal assessment.

Exam Rules

1. General Provisions
The examination is written and consists of three questions, which may include sub-questions, to be completed within 70 minutes.
At the end of the course, the professor may, upon prior notice to students, offer an optional practical test using the econometric software Stata. This test will be graded on a scale of 0 to 2 points, with the scores added to the grade obtained in the written examination. These additional points remain valid for the entire academic year and expire at the beginning of the following academic year.

2. Rules for Taking the Examination
The essential requirement for taking the examination is registration through the Delphi system within the prescribed registration period. Failure to register will prevent the student from taking the examination. In the event of difficulties with registration during the registration period, students must inform the professor immediately.
Students are required to arrive at least 15 minutes before the examination begins and must not enter the assigned classroom until called during roll call.
Students must present a valid form of identification. If a student cannot be identified with certainty, they will not be permitted to take the examination.

3. Rules During the Examination
Students are not permitted to leave the classroom during the examination.
A student who responds to the roll call may withdraw from the examination after receiving the examination paper, according to the procedure communicated by the professor in the classroom.
Late-arriving students who enter after even a single student has withdrawn and left the classroom will not be permitted to take the examination.

4. Examination
The examination is written and covers the entire course syllabus.
The use of calculators, mobile phones, or other electronic devices is not permitted unless the professor specifies otherwise.
Results, expressed on a scale of 30 points, will be published on the course website.

5. Recording of Grades
Students may take the examination during any examination session.
However, students may take the examination a maximum of two times.
An examination attempt is considered the student’s first attempt in the following three cases:
• Case 1: The student responds to the roll call, receives the examination paper, and
withdraws from the examination ("withdrawn").
• Case 2: The student responds to the roll call, receives the examination paper, submits the
completed examination, and receives a failing grade ("failed").
• Case 3: The student responds to the roll call, receives the examination paper, submits the
completed examination, and receives a passing grade, which is subsequently
refused ("refused").
If any of the three cases above occur, the first passing grade the student earns after the first examination attempt will be officially recorded, without the possibility of refusal. No exceptions to this rule shall be granted.

6. Review of the Examination and Acceptance of the Grade
Students may review their examination paper on the date and at the time indicated by the professor, and, in any case, within 15 days of the examination. In such circumstances, students are invited to contact the professor in order to arrange an appointment.
The discussion of the examination paper takes place exclusively in person.
Students who do not intend to accept the grade, where permitted under Section 5 of these regulations (“Recording of Grades”), must notify the professor in accordance with the procedure indicated when the results are published.

7. Assessment Criteria
The examination will be assessed according to the following criteria:
• Fail: Significant and serious deficiencies and/or inaccuracies in the knowledge and understanding of the topics; limited analytical skills, frequent generalizations, and limited critical and evaluative abilities. Topics are presented poorly and incoherently, using inappropriate language.
• 18-20: Barely sufficient knowledge and understanding of the topics, with possible generalizations and inaccuracies; barely sufficient analytical skills and independent judgment. Topics are frequently presented in inappropriate, often inconsistent language. Limited in-depth analysis of the topics.
• 21-23: Routine knowledge and understanding of the topics; satisfactory analytical skills, with sufficiently coherent logical argumentation and generally appropriate language. Limited critical discussion of the topics.
• 24-26: Fair knowledge and understanding of the topics; good analytical and synthesis skills, with arguments presented rigorously, although language is not always fully appropriate. Fair level of in-depth analysis.
• 27-29: Comprehensive knowledge and understanding of the topics; strong analytical and synthesis skills; good independent judgment. Topics are presented rigorously and with appropriate language. Good level of in-depth analysis and ability to establish connections among topics.
• 30-30 cum laude: Excellent and in-depth knowledge and understanding of the topics; outstanding analytical, synthesis, and independent judgment skills. Arguments are presented originally and using appropriate technical language. Excellent ability to critically examine the topics and establish sophisticated connections among them.

Attendance Rules

The professor strongly encourages students to attend lectures.