Empirical banking: methods and applications

ENSAE Master 2 – March/April 2018

Course schedule: 23, 30 March, 6, 13 April 2018.

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

Papers for in-class presentations (15 minutes + discussion)

On relationship banking :


Nguyen, 2017. Are credit markets still local: evidence from bank branch closings, forthcoming, AEJ Applied. http://faculty.haas.berkeley.edu/hqn/nguyen_branches_20170828.pdf


On finance and growth :


Bertrand, Schoar, Thesmar, 2007. Banking deregulation and industry structure: evidence from the French banking reforms of 1985. Journal of Finance, 62(2), April. http://citeseerx.ist.psu.edu/viewdoc/download?doi=

On large and complex banks :

Fraisse, Hombert, , 2017. The Competitive Effect of a Bank Megamerger on Credit Supply https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2773311##  

Homework assignement (deadline: 29 April 2018)

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:

Groppe, 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

Claesens, 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.

Crosignani, Matteo, Miguel Faria-e-Castro, and Luís Fonseca (2017). "The (Unintended?) Consequences of the Largest Liquidity Injection Ever," Finance and Economics Discussion Series 2017-011. Board of Governors of the Federal Reserve System (U.S.)

Laura Alfaro, Manuel García , Enrique Moral-Benito (2017). “Credit Supply Shocks, Network Effects, and the Real Economy” http://d.repec.org/n?u=RePEc:hbs:wpaper:18-052&r=ban


Yassine Bakkar, Olivier de Jonghe, Amine Tarazi (2017). “Does banks' systemic importance affect their capital structure adjustment process?http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01546995&r=cba