Fall 2025: University of Minho

Economics of Finance and Banking (Wednesdays 15:30-17:00, ed1 2.14; Fridays 16.00-17:30 ed1 2.22)

• Syllabus

• Other resources and readings:

  • Hannes Malmberg discusses the effect of population agreeing on interest rates and financial markets (podcast)

  • Cliff Asness on factor investing and the history of financial economics (podcast)

• Readings for the course

  • Week 1: Overview of the course; motivating the study of finance and banking; constrained optimization theory [handout 1; handout 2]

  • Week 2: Two period models of intertemporal consumption and investment [handout 1]

  • Week 3: Decision making under uncertainty and general equilibrium with Arrow-Debreu markets [handout 1]

  • Week 4: Arrow-Debreu financial markets (cont); introduction to modern portfolio theory [handout 1, handout 2]

  • Week 5: Introduction to modern portfolio theory (cont). Revisions for the midterm [handout1; computer codes]

  • Week 6: Midterm week: Saturday 25th October; 9.00am; room ed2. 0.07 [midterm]

  • Week 7: The Capital Asset Pricing Model [handout1]

  • Week 8: The Capital Asset Pricing Model (cont.); implications of firm financing [handout1]

  • Week 9: Firm capital structure in a perfect financial market [handout1]

  • Week 10: Macro financial crises and the banking system; theoretical arguments about liquidity and the role of banking financial institutions [handout1; handout2]

  • Week 11: Banking crises in a Diomond and Dybvig enviroment; alternative banking systems and regulation [handout1]

  • Week 12: Deposit insurance, Basel accords, and other banking regulation [handout1]

• Additional exercises: set1; set2; set3; set 4; set 5; set 6

• Mock midterms and exams: mock midterm1_2; mock midterm1_1, mock2midterm_2_1, mock2midterm_2_2

• Grades: Midterm1; Midterm2; Average; Letter