ECON 252: Financial Markets
Lecture 13 - Banking: Successes and Failures. Banks, which were first created in primitive form by goldsmiths hundreds of years ago, have evolved into central economic institutions that manage the allocation of resources, channel information about productive activities, and offer the public convenient investment vehicles. Although there are several types of banking institutions, including credit unions and Saving and Loan Associations, commercial banks are the largest and most important in the banking system. Banks are designed to address three significant problems in capital markets: adverse selection, moral hazard, and liquidity. Banks make money by borrowing long and lending short and use fractional reserves to lend more funds than are deposited. History has seen numerous problems in banks, including bank runs and insolvency. Government support and regulation, such as those implemented via the Basel Accord, as well as rating agencies help to ensure that investors trust the banks with which they have relations. (from oyc.yale.edu)
| Lecture 13 - Banking: Successes and Failures |
| Time | Lecture Chapters |
| [00:00:00] | 1. On Andrew Redleaf: Reaping Rewards from Opportunities |
| [00:11:06] | 2. The Origin of Banks, from Goldsmiths to Commercial Banks |
| [00:25:29] | 3. Why Banks Exist: On Adverse Selection, Moral Hazard and Liquidity |
| [00:37:15] | 4. Rating Agencies: Do They Work? |
| [00:44:08] | 5. The Ongoing Fragility of Banks and Structures of Bank Regulation |
| [00:58:17] | 6. The Subprime Crisis in the U.S. and in Europe |
| References |
| Lecture 13 - Banking: Successes and Failures Instructor: Professor Robert J. Shiller. Resources: Lecture 13 [PDF]; Problem Set 5: Banking, Mortgage Lending, and Securitization [PDF]. Transcript [html]. Audio [mp3]. Download Video [mov]. |
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