A well-functioning financial system is fundamental to a modern economy, and banks provide unique and vital functions in the society.

·       Why do we have to have banks in this world?

·       Is the mobile payment system a threat to commercial banks?

·       What is the difference between bitcoin and Central Bank Digital Currency?

·       How to prevent banks from being “too big to fail”?

From the first institution that provides credit services in the world to the Imperial Bank of China, the first modern bank in China established by Mr. Sheng Xuan Huai, the founder of Shanghai Jiao Tong University, then to the largest banks in the world after years of reform; from the first bank draft to Mobile Payment; from the first paper money in the world to the Digital RMB, the Chinese wisdom helped the banking industry go through many ups and downs.

On the other side of the Pacific Ocean, the banking industry in the U.S. has also been through many ups and downs, from the Bank Run in the 1930s to the Savings and Loan Debacle in the late 1980s, then to the Global Financial Crisis in 2008.

Through case studies, building on basics in finance and principles in economics, I will analyze the specialness of and risks faced by financial intermediaries, as well as games played between regulators and financial institutions.

This is an all-in-English course. I will introduce the history and reforms in the banking industry in China to the world, building a bridge between the West and the East; I will introduce analytical tools and techniques to deal with risks faced by banks in the changing global economy and build a bridge between the theory and practice.

This course builds on basic financial theory and the principles courses in economics. It addresses topics that are important for managing financial institutions in a rapidly changing international environment. Upon successful completion of the course, students should be able to understand the role of financial institutions in the economy; explain why banks are unique, and therefore merit special attention; to understand the analytical foundation underlying financial institutions management, and be able to use them to analyze important financial issues, including financial crisis; be familiar with risk management techniques to deal with the various risks banks and other financial institutions face.

Prerequisites:

• Introduction to Finance

• Money and Banking

• Basic economic theory: macroeconomics and microeconomics

• Basic math: algebra, differential calculus, statistics

• A disposition to keep informed of current developments in the area of banking and finance.

Textbook:

•        Saunders and Cornett, Financial Institutions Management: A Risk Management Approach, 9th edition/International Edition, McGraw Hill, 2018 (FIM)

•        Nan Li and Meijun Qian (2023), Alternative Financial Institutions in China, Chapter in Research Handbook on Alternative Finance, edited by Franklin Allen and Meijun Qian, Edward Elgar Publishing, Available at https://ssrn.com/abstract=4521419

References：

•        Diamond, Douglas W. Financial Intermediation and Delegated Monitoring, Review of Economic Studies, vol. 51 (July 1984), 393–414.

•        Diamond, Douglas W. and Philip H. Dybvig, Bank Runs, Deposit Insurance, and Liquidity, Journal of Political Economy, Vol. 91, No. 3. (Jun., 1983), 401-419.

Q: What are the references for this course?

A: The lecture notes written by Professor Nan Li are the main references for this course, which are based on the following, 

1.      Saunders and Cornett, Financial Institutions Management: A Risk Management Approach, 9th edition/International Edition, McGraw Hill, 2018(FIM)

2.      Nan Li and Meijun Qian (2023), Alternative Financial Institutions in China, Chapter in Research Handbook on Alternative Finance, edited by Franklin Allen and Meijun Qian, Edward Elgar Publishing, Available at https://ssrn.com/abstract=4521419

3.      Cases written by Professor Nan Li

4.      Website of Federal Reserve, People's Bank of China, FDIC, CBIRC and other central banks and regulators.

5.      Journal articles in the references for each topic

6.      Selected news articles written by Professor Nan Li and other scholars or journalists

Q: What are the differences between the MOOC lecture videos and recorded live class videos?

A: MOOC lecture videos are pre-recorded, short, and concise (10-25 minutes per session, 10 hours in total), containing the discussion about the core concepts and methods. The  recorded live class videos contain much richer contents, including discussion of the latest events and development in the banking industry, such as mobile payment, FinTech, digital currency, platform economy and etc.