Empirical banking: methods and applications

ENSAE Master 2 – February/March 2017

Course schedule: 24 February, 3, 10, 17, 24, 31 March 2017.

Contact: jean-stephane.mesonnier@banque-france.fr.

Course curriculum and references


1. Why do banks exist? Relationship-banking in normal times and during crises. Securitization and the originate-to-distribute model.

2. More finance, more growth? Financial development, the efficiency of financial intermediation, rents and bankers’ pay

3. Do we need big banks? The rise of the banking giants, economies of scale and scope, the too-big-to-fail problem.

4. Global banks: more stability or more contagion? The international transmission of policy and liquidity shocks.

5. The transmission of monetary policy: the bank lending channel. Also: slides of Andrade, Cahn, Fraisse and Mésonnier on impact of 2011 LTROs

6. Banking regulation: regulating bank capital, benefits and costs. Part 1: bank capital regulation, Part  2: impact on lending,  also: slides of Mésonnier and Monks on  2011 EBA Capital exercise


Homework assignement (deadline: 15 April 2017)

You will write a 2-3 pages commentary on one of the selected papers below. Your work will take the form of a referee report for a fictitious journal. The standard outline of such a report is the following:  

- short summary of the paper, its methodology and its main results (less than one page),
- general assessment (praise and weaknesses: one paragraph)
- main comments (a series of -methodological, econometric, conceptual...- issues to be solved or improved, or important questions that need to be answered, in particular if the journal is to publish the paper)
- minor comments (a few other points)

Proposed papers:

1.    Gropp, Reint; Mosk, Thomas; Ongena, Steven; Wix, Carlo, 2016. Bank response to higher capital requirements: Evidence from a quasi-natural experiment: https://www.econstor.eu/bitstream/10419/148361/1/874406994.pdf

2.    Sebastian J A de-Ramon, William B Francis and Qun Harris, 2016. Bank capital requirements and balance sheet management practices: has the relationship changed after the crisis?: http://www.bankofengland.co.uk/research/Documents/workingpapers/2016/swp635.pdf

3.    Lotti, Francesca and Manaresi, Francesco, (2015), Finance and creative destruction: evidence for Italy, No 299, Questioni di Economia e Finanza (Occasional Papers), Bank of Italy, Economic Research and International Relations Area: http://EconPapers.repec.org/RePEc:bdi:opques:qef_299_15.

4.    Claessens, Stijn, Hassib, Omar and Van Horen, Neeltje, (2017), The Role of Foreign Banks in Trade, No 11821, CEPR Discussion Papers, C.E.P.R. Discussion Papers: http://EconPapers.repec.org/RePEc:cpr:ceprdp:11821.

5.    Bofondi, Marcello, Carpinelli, Luisa and Sette, Enrico, (2013), Credit supply during a sovereign debt crisis, No 909, Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area: http://EconPapers.repec.org/RePEc:bdi:wptemi:td_909_13.

6.    Hasan, Iftekhar ; Jackowicz, Krzysztof ; Kowalewski, Oskar ; Kozlowski, Lukasz (2017). The Economic Impact of Changes in the Local Bank Presence, Working Paper, IESEG School of Management: http://d.repec.org/n?u=RePEc:pra:mprapa:76098&r=cfn

7.    Célérier, Claire, Thomas Kick and Steven Ongena, 2016, Changes in the cost of bank equity and the supply of bank credit, August: Nov 2016 version (PDF, 372 kB)