intermediate

FIN 6778

Free study notes for FIN 6778 (FIN6778), one topic at a time, each with worked examples and a practice quiz.

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Course Syllabus

  1. Introduction to Financial Markets and Institutions
  2. Traditional Banking Systems
  3. Banking Risks and Regulation
  4. Problems with Traditional Finance: Systemic Flaws
  5. Problems with Traditional Finance: Efficiency and Trust
  6. Emergence of Shadow Banking and Opaque Markets

Study Notes

Emergence of Shadow Banking and Opaque Markets

Shadow banking isn't a new concept, but its scale and complexity grew significantly in the decades leading up to the 2008 global financial crisis. It generally refers to credit intermediation involving entities and activities (in whole or in part) outside the regular banking system.

The key drivers for its emergence and growth include:

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Problems with Traditional Finance: Systemic Flaws

Traditional finance, largely built on ideas like the Efficient Market Hypothesis (EMH) and Rational Economic Man (REM), assumes that all available information is instantly reflected in asset prices, and that investors always act logically to maximize their own wealth. While these concepts provide a useful baseline, they often don't hold up in the messy, unpredictable real world.

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Banking Risks and Regulation

Banks face a complex web of risks that, if unmanaged, can lead to failure. Regulators, in turn, create rules and oversight to mitigate these risks and ensure the stability of the financial system.

Scattered wooden letter tiles spelling 'credit risk' on a rustic wooden surface.
Photo by Markus Winkler on Pexels

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Traditional Banking Systems

Traditional banking systems are built on a few core functions: deposit taking, lending, and payment processing. Banks are highly regulated entities, designed to protect depositors and maintain financial stability.

Close-up of a person's hand placing coins into a transparent piggy bank to save money.
Photo by Joslyn Pickens on Pexels

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FIN 6778: common questions

What does FIN 6778 cover?

This FIN 6778 study guide covers 6 topics: Introduction to Financial Markets and Institutions, Traditional Banking Systems, Banking Risks and Regulation, Problems with Traditional Finance: Systemic Flaws, Problems with Traditional Finance: Efficiency and Trust, Emergence of Shadow Banking and Opaque Markets.

Are these FIN 6778 notes free?

Yes. Every FIN 6778 note on this page is free to read without an account. A free account adds practice quizzes, flashcards and a revision plan.

How do I revise for my FIN 6778 exam?

Read the FIN 6778 note for each topic, then take its practice quiz: the questions you get wrong come back as flashcards until you know them. Save the course to get a revision plan built around your exam date.