Banking and Financial Markets

1. Front Matter

   Pages i-xi

   PDF

2. Introduction

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 1-4

3. Securitization and Lending

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 5-30

4. Interest Rate Risk

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 31-60

5. Credit Risk

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 61-104

6. Collateral and Lending

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 105-132

7. Global Banking

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 133-178

8. FinTech and the Future of Banking

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 179-199

9. Conclusion

   • Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena

   Pages 201-203

10. Back Matter

    Pages 205-221

    PDF

The traditional role of a bank was to transfer funds from savers to investors, engaging in maturity transformation, screening for borrower risk and monitoring for borrower effort in doing so. A typical loan contract was set up along six simple dimensions: the amount, the interest rate, the expected credit risk (determining both the probability of default for the loan and the expected loss given default), the required collateral, the currency, and the lending technology. However, the modern banking industry today has a broad scope, offering a range of sophisticated financial products, a wider geography -- including exposure to countries with various currencies, regulation and monetary policy regimes -- and an increased reliance on financial innovation and technology. These new bank business models have had repercussions on the loan contract. In particular, the main components and risks of a loan contract can now be hedged on the market, by means of interest rate swaps, foreign exchangetransactions, credit default swaps and securitization. Securitized loans can often be pledged as collateral, thus facilitating new lending. And the lending technology is evolving from one-to-one meetings between a loan officer and a borrower, at a bank branch, towards potentially disruptive technologies such as peer-to-peer lending, crowd funding or digital wallet services.
This book studies the interaction between traditional and modern banking and the economic benefits and costs of this new financial ecosystem, by relying on recent empirical research in banking and finance and exploring the effects of increased financial sophistication on a particular dimension of the loan contract. 

• Microeconometrics of Banking
• modern financial markets
• financial innovations
• financial regulations
• central banks
• banking and asset pricing
• Interest Rate Risk
• Credit Risk
• Securitization
• Global Banking
• Shadow Banking
• Fintech
• banking

• Department of Banking and Finance, University of Zurich, Zürich, Switzerland

  Andrada Bilan, Kuchulain O’Flynn, Steven Ongena

• Faculty of Economics and Business, Katholieke University of Leuven, Leuven, Belgium

  Hans Degryse

Andrada Bilan is a PhD candidate in finance at the Swiss Finance Institute and University of Zurich, Switzerland.

Hans Degryse is a professor at KU Leuven, Belgium, and a research fellow in financial economics of CEPR, UK.

Kuchulain O'Flynn is a PhD candidate in finance at the Swiss Finance Institute and the University of Zurich, Switzerland.

Steven Ongena is  a senior chair at the Swiss Finance Institute and a professor at the University of Zurich, Switzerland, a research professor at KU Leuven, Belgium, and a research fellow in financial economics of CEPR, UK. 

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