Structure And Regulation Of Financial Markets

Description:
Aimed at advanced undergraduate and graduate students in economics, banking, and finance, this is a core textbook for the financial markets, institutions, and regulation option of courses in financial economics. It integrates modern theories of asymmetric information into the analysis of financial institutions, relating the theory to current developments. The text begins with an analysis of adverse selection in retail financial products like life assurance before looking at open capital markets where trades and prices provide information. It then progresses to the more complex areas of corporate governance and financial intermediation in which information is confidential and moral hazard and verification problems become important. These chapters study the various mechanisms that the financial markets have developed to allow investors to delegate the management of their assets to others. This analysis is used to show how regulation can reduce the risk of financial failure and how legal, accounting, and regulatory mechanisms can help shape a country's corporate and financial architecture. These difficult theoretical concepts are conveyed through the careful use of numerical illustrations and topical case studies. Each chapter ends with a set of exercises to test and reinforce students' comprehension of the material. Worked solutions are provided for the numerical exercises.

Table of Contents:
1. Introduction: Asymmetric Information in Financial Markets; 2. Adverse Selection and the Market for Retail Financial Services; 3. The Structure and Regulation of Insurance Markets; 4. Capital Market Microstructure and Regulation; 5. Information Revelation, Transparency, and the Regulation of Insider Dealing; 6. Security Research and Regulation; 7. The Equity Market and Managerial Efficiency; 8. The Theory of Financial Intermediation; 9. Convexity, Excessive Risk, and Regulation of Banks; 10. Bank Runs, Deposit Insurance, and the Role of the Regulator; 11. Bank Regulation in Practice; 12. Financial Structure and Regulation