This course provides an in-depth look at financial institutions and the role they play for financial markets today. The course will address questions such as: Which financial institutions exist? Why do they exist? What risks do they face? How do they manage those risks? How does the behavior of financial institutions impact financial markets and asset prices? How does their behavior impact the economy at large? How should we regulate financial institutions? The course Financial Institutions II will put emphasis on important non-bank financial institutions (e.g., pension funds, mutual funds, hedge funds etc.).
After completing this course, students will have a thorough understanding of the economic reasons for the existence of non-bank financial institutions. Students will understand the ecosystem of non-bank financial institutions and their role in the global financial markets. Students will gain knowledge about what risks managers in non-bank financial institutions face and how they manage those risks. Students will also learn how non-bank financial institutions impact asset prices and financial market outcomes. Finally, students will learn about current approaches and proposals for regulating financial institutions.
Every student participating in this course should have completed the equivalent of the 2-semester finance module, which is part of the Mannheim Bachelor program. The lectures generally assume basic knowledge in accounting (balance sheets, income statements, financial ratios), finance (present value methods, portfolio theory, CAPM), mathematics (calculus, optimization) and statistics (mean, variance, standard deviation, univariate and multivariate regressions). It is strongly recommended that students take the course Financial Institutions I (FIN 590) before taking Financial Institutions II (FIN 684).