040345 KU Advanced BA/CF/FM: Financial Crises (MA) (2018W)

This course provides an introduction to financial crises. The course will focus on three types of financial crises and the interconnections that exist between: (i) banking crises, (ii) currency crises and (iii) sovereign debt crises. The course will include a broad historical overview of past financial crises, from early 20th century banking crises up to the 2007/08 Global Financial Crisis and subsequent Eurozone Sovereign Debt Crisis . The main part of the course will be devoted to analyzing recent economic models of financial crises. The methodology will be primarily game theoretic, with a particular emphasis on coordination and global games.

Topics covered in the course will include:

1. Maturity and Liquidity Mismatch

2. Bank Runs and Deposit Insurance

3. Fire Sales, Adverse Selection and Market Freezes

4. Sovereign Debt and the Sovereign-Banking Nexus

5. Balance-of-Payments and Twin Crises

6. Global Games of Regime Change

7. Government Guarantees and Moral Hazard