This course presents the concepts, principles and models underlying prudential regulation of banks and studies how they have to be modified to deal with systemic risk and contagion. It discusses the use of lenders of last resort as a way to reduce systemic risks, contagion and transmission of balance sheet imbalances and other measures for bank resolution that shield the banking system from generalized crises and runs. The course will feature lectures and applications to real life situations.
The objectives of prudential regulations
Capital regulation for banks: static and dynamic models