Although titled "Money and Banking", this course teaches a variety of topics that are useful for students in economics, business, and finance.

So, choose topics you want to learn from the "Learning Plan" below, and jump to the relevant lecture videos.

Good luck!!

Learning Plan

Portfolio risk management

• Rate of return 2:06
• Short-selling 6:43
• Mean, Variance, Covariance, Standard deviation, and Correlation coefficient of random variables 9:27
• Mean and variance when there are more than 2 random variables 22:59
• Expectation of a linear combination 28:05
• Variance formulas 33:32
• Variance formula in the matrix form 41:48
• Formulating the portfolio choice problems 2:16
• Excel solver for portfolio optimisation 18:10
• Comment on adjusted price 46:59 of week-7 b

Preliminaries:

• Excel basics for Matrix algebra 10:02

Insurance risk management

• Coin toss example 0:43
• Binomial distribution 3:46
• Insurance 10:28

Banks' role and the four risks that banks face

1. Credit risk

• Accounting for economics students 19:31
• Banks' role of Qualitative Asset Transformation (QAT) 37:37
• Credit risk
• Ratios
• Assessing financial statements
• Statistical credit scoring

2. Bonds, Interest rates, and Interest rate risk

• Fundamental math of Interest rates 0:32 of week-3 a
• Relation between the bond price and interest rate 5:25 of week-3 a
• Yield curve 10:32 of week-3 a
• Interest rate risk 23:25 of week-3 a
• Coupon bond 30:38 of week-3 a
• How to get a yield curve from coupon bond prices 32:55 of week-3 a
• Yield to maturity 42:25 of week-3 a

3. Liquidity, and liquidity risk

• Liquidity of projects 0:01 of week-3 b
• Liquidity of assets 3:25 of week-3 b
• Liquidity of institutions and liquidity risk 13:09 of week-3 b
• Liquidity of banks and bank liquidity risk 16:13 of week-3 b

4. Collateral risk

• Collateral 33:01 of week-3 b
• Strategic default 38:15 of week-3 b
• Summary: Interest rates and bond prices depend on... 41:23 of week-3 b
• Default risk multiplier in re-financing 1:13 of week-4 a

Microeconomics of hidden types and actions, and its applications to banking

Belief update, long-term relation, Reputation

• Belief updating 8:33
• Probability tree 11:42
• Expected payoff maximisation 18:42
• Application to banking 23:59
• Myopic vs Dynamic optimisers 36:00
• James meets a girl example revisited for dynamic optimisation 39:29

Adverse selection, Signalling, and Collateral

• Problems caused by hidden types 1:38 of week-4 b
• Adverse selection 4:43 of week-4 b
• Adverse selection in banking 13:04 of week-4 b
• Adverse selection in insurance 27:06 of week-4 b
• Signalling 29:00 of week-4 b
• Signalling in banking 40:23 of week-4 b
• Adverse selection in banking and collateral 0:07 of week 5
• Designing a menu of choices Introduction 12:58 of week 5
• Indifference lines 13:53 of week 5
• Price discrimination 18:15 of week 5
• Designing a menu of choices 22:31 of week 5
• Example: CPU company's problem 24:15 of week 5
• CPU company's problem with a diagram 36:07 of week 5
• IC and PC conditions 43:32 of week 5

Hidden actions, Moral hazard, and collateral

• Pareto dominance 0:32 of week-6 a
• Pareto efficiency 4:41 of week-6 a
• Lack of commitment (Intro) and SPE 8:27 of week-6 a
• 2 types of lack of commitment 12:46 of week-6 a
• Commitment device 21:41 of week-6 a
• Letters of credit 27:13 of week-6 a
• Hidden action problem 33:24 of week-6 a
• Moral hazard problem in banking 42:52 of week-6 a
• Moral hazard in banking (continued from the last class) 0:06 of week-6 b
• Collateral solves moral hazard 11:45 of week-6 b
• Equilibrium as second best 33:01 of week-6 b
• Equity requirement 37:14 of week-6 b

Financial Derivatives

Preliminaries

• Compounding 0:25 of week-7 a
• Basic interest rates 3:54 of week-7 a
• Options 10:21 of week-7 a
• Contingent claims 16:53 of week-7 a
• Financial derivatives 21:54 of week-7 a

Forward interest rates

• Forward interest rates 29:18 of week-7 a
• Deriving forward rates from spot rates 34:48 of week-7 a
• Forward yield curve 41:04 of week-7 a
• Relation between forward interest rate and forward bond price 0:07 of week-7 b
• Summary of spot/forward rates and prices 4:09 of week-7 b
• Interest rate swap 5:17 of week-7 b
• OIS 12:45 of week-7 b
• Futures 16:43 of week-7 b

Options

• Call and Put options 25:29
• No-arbitrage price theory (Introduction) 30:54
• Fruit basket example 36:25
• No-arbitrage pricing theory (Definition) 2:21
• No-arbitrage pricing for options (Question) 5:43
• Arrow-Debreu securities 9:51
• Option pricing (Answer) 12:22
• Loan commitment 22:47
• Credit Default Swap (CDS)
• Off-balance-sheet transactions 46:28

Funds, Securitization, and Shadow banking

Funds

• Types of portfolios 0:51
• Types of portfolios and Investment strategies 6:34
• Indices 12:42
• Funds 22:17
• Active vs Passive funds 25:25
• Open-end vs Closed-end funds 27:37
• Some fund sellers' websites visited 29:36

Securitization and shadow banking

• Securitization (Pass-throughs) 35:53
• Stripping 42:54
• Cash-flow timings matched and mismatched 44:22
• Recap 0:01
• Asset-backed bonds (ABB) 2:25
• Special purpose vehicle I 6:11
• Special purpose vehicle II 10:09
• CDO 13:15
• Tranching 16:54
• Why securitization? 23:22
• Shadow banking 32:35
• Re-financing 36:07
• Asset-Backed Commercial Papers (ABCP) 41:18
• Recap on ABCP 0:01
• ABCP as shadow banking 3:32
• Repo 9:29
• Securitized banking 16:47
• Money Market Fund (MMF) 23:42

Central bank, Monetary policy, Banking system, and Financial crisis

• Money creation 30:21
• Money vs Asset dichotomy 42:26
• Central bank 0:19
• Interbank market 5:13
• How the central bank supplies money to other banks 13:29
• Monetary policy 18:30
• LIBOR-OIS spread 27:46
• Commercial paper 38:31
• QAT 39:23
• Bank runs 41:02
• Outline of the 2007-2008 crisis 44:40
• 2007-2008 financial crisis

Slides

• Slides 1 (Portfolio management and insurance)
• Slides 2 (Credit risk)
• Slides 3 (Interest rate risk)
• Slides 4 (Liquidity risk and Collateral risk)
• Slides 5 (Belief update and dynamic optimisation)
• Slides 6 (Hidden type, Adverse selection, Mechanism design)
• Slides 7 (Lack of commitment, Moral hazard)
• Slides 8 (Derivatives with two-sided obligations)
• Slides 9 (Options, State prices)
• Slides 10 (Funds)
• Slides 11 (Securitisation)
• Slides 12 (Money, Central bank, and Monetary policy)
• Slides 13 (Financial crisis)