01645 - Financial Brokerage Economics

Learning outcomes

The purpose of the course is to increase the knowledge of financial system. By the end of the course, students learn about financial choices on saving and investments, the microstructure of the securities industry and the economic equilibria of banks. Last, the students will understand financial supervisory goal, instruments and authorities.

Course contents

The course aims to provide an in-depth understanding of the functioning of the financial system, with particular focus on the dynamics governing the interaction between households and firms through the action of financial intermediaries. It highlights both the processes of savings allocation by households and the financing needs of firms, emphasizing the crucial role of intermediaries in promoting economic growth.

The first part of the course introduces the fundamentals of the financial system, equipping students with the conceptual and linguistic tools necessary to navigate the sector. After presenting the supply of financial services and the structure of the system, attention is directed to the main theories of intermediation and the role of intermediaries in bridging savings and investment. This section concludes with an analysis of financial risks and management strategies, accompanied by a familiarization process with technical terminology and the operational logic of the contemporary system.

The second part focuses on financial instruments and the markets in which they are traded. It examines intermediation contracts and the main categories of instruments, analyzing their characteristics in terms of risk, return, and financial flow structure, for both fixed-income and variable-income instruments. In parallel, the functioning of financial markets is explored, distinguishing between regulated and unregulated markets, and between primary and secondary markets. This section provides students with the necessary foundations to interpret the behavior of financial instruments in relation to the macroeconomic framework and monetary policies.

The third part of the course is dedicated to a deeper analysis of financial intermediation activities and the authorized entities operating within the system. It investigates the institutional structures of intermediaries, organizational strategies, and operational methods through which financial services are delivered. The role of technological innovation is examined, with particular reference to FinTech, and how it is transforming the structure and functions of traditional intermediaries. Significant attention is given to the regulatory and supervisory framework, focusing on internal governance, controls, and responsibilities. In this context, the functioning of the European Banking Union and the role of the European Central Bank in defining monetary policy are explored, with reference to the instruments used to ensure price stability and the soundness of the financial system.

Main Topics Covered:

• The financial system and the supply of services
• Theories of financial intermediation
• Risks and management strategies
• Intermediation contracts
• The payment system and services
• Financial markets
• Activities and institutional structures of intermediation
• Technological innovation and FinTech
• Strategies and organization of intermediaries
• Oversight of the European financial system
• Regulation, supervision, governance, and internal controls
• Monetary policy and the role of the ECB

The learning path is enriched by empirical analyses related to the Italian, European, and international contexts, thus combining theoretical and institutional study with direct engagement with operational dynamics.

Readings/Bibliography

Nadotti, L., Porzio, C., & Previati, D. (2022). Economics of Financial Intermediaries. With online updates (4th ed., Vol. 1). McGraw-Hill Education (Italy) srl.

Given the relevance of the topics covered, the textbook may be supplemented with examples and additional readings suggested by the instructor.

Note: The slides used during lectures are a helpful educational tool for summarizing content, but studying them alone does not cover the entire exam syllabus. Therefore, students are required to complement their preparation with the textbook and with articles and in-depth materials indicated and distributed during the course.

All materials will be regularly uploaded to virtuale.unibo.it.

Teaching methods

In-person lectures, practical exercises, and classroom discussions.

For certain topics involving financial calculations, exercises using Excel are planned. Additional exercises and simulations will be proposed by the instructor throughout the course.

Assessment methods

The final exam consists of a written test designed to evaluate the achievement of two key learning objectives: the understanding of core theoretical concepts and the ability to analyze economic, financial, and business phenomena through basic exercises.

Final Exam Structure

The exam is divided into two sections:

1. Section One: 19 multiple-choice questions, each with five possible answers and only one correct option. This section lasts 45 minutes, and each correct answer is worth 1 point, for a total of 19 points.
2. Section Two: 4 open-ended questions and/or exercises, each worth 3 points, for a total of 12 points.

The total duration of the exam is 90 minutes, and the maximum score is 31 points. There are no penalties for incorrect or unanswered questions.

Midterm Exams

Two midterm exams are scheduled during the teaching period. The first midterm takes place at the end of the first module, and the second at the end of the second module. These assessments are designed to monitor students’ progress through the course content in stages.

• First Midterm:
• 9 multiple-choice questions (1 point each)
• 2 open-ended questions and/or exercises (3 points each)
• Maximum score: 15 points
• Minimum passing score: 9 points
• Duration: 45 minutes
• Second Midterm:
• 10 multiple-choice questions (1 point each)
• 2 open-ended questions and/or exercises (3 points each)
• Maximum score: 16 points
• Minimum passing score: 9 points
• Duration: 45 minutes

To pass the course through midterm exams, the combined score of both must be at least 18 points.

Additional Notes

If the exam is not passed, students may retake it during any subsequent official exam session. The exam grade may be refused no more than twice. Any refusal must be communicated via email by the day of the instructor’s next office hours.

From the first full exam session onward, the exam will cover the content of both teaching modules. Exercises provided in the course materials serve as examples for preparation but may not be replicated in future exam sessions.

During the exam, the use of supporting materials such as textbooks, personal notes, or electronic devices is not permitted. Registration for the exam is mandatory, and students must register via AlmaEsami: https://almaesami.unibo.it/almaesami/welcome.htm.

Teaching tools

Slides and case study discussions in class.

Slides can be downloaded by clicking on “Teaching Resources on Virtuale” or directly from the Virtuale website: https://virtuale.unibo.it.

Office hours

See the website of Carmelo Algeri