3.00 credit hours
This course will provide students with an understanding of the economic underpinnings of financial regulation as it exists in the United States today. The course will highlight salient aspects of financial markets, such as asymmetric information and the chains of exposures linking financial market participants, that make financial regulation both necessary and yet problematic. Emphasis will be put on the difference between regulations on individual financial firms as compared with regulating for systemic financial stability. The course will be designed to: (1) provide enhanced understanding of financial markets to undergraduate students who have already taken ECON/BAFI 341 (Money and Banking); (2) provide institutional insight to master's level finance students; (3) illustrate the application of welfare analysis to financial regulation, and (4) teach all students to think critically about regulatory arbitrage and the dynamic evolution of regulated markets.