INTERNATIONAL INDUSTRIAL ECONOMICS
Learning outcomes of the course unit
a) Knowledge and understanding of: recognize opportunities brought about by the dramatic changes that have occurred in the past decade in the banking industry; the main problems related to the bank management (asset/liability management, risk management); the banking regulation system.
b) Ability to apply knowledge in order to: apply basic finance concepts to help in the decision making framework at managing financial institutions; understand the risks associated by the unique position that banks hold as a recipient of funds, and how to effectively manage them.
c) Ability to integrate knowledge and handle complexity, and formulate judgements with incomplete or limited information in order to: choose financial instruments appropriate for managing the banks’ risks.
d) Students will have the ability to communicate their conclusions and the underpinning knowledge and rationale to financial operators as well as to non-specialist audiences using a proper technical language.
e) Since a problem solving approach will be adopted, together with the analysis of case studies, students will learn to study in a largely selfdirected and autonomous manner.
a. Knowledge and understanding. The course aims at making students able to understand the endogenous and exogenous changes regarding the multinational enterprise. The necessary way to reach it can be divided in four steps: a) to learn the behavior of the firm according to industrial organization; b) to analyze the multinational enterprise, even as a leading firm of a global value chain; c) to assess and to to understand the rules of working of an international global value chain; d) to examine the public attitude, both at a State and at supranational institution level, towards firms, by way of industry, innovation, energy and environment policies. The analysis of case studies for relevant industries (automotive and photovoltaic), for single countries or for relationships between countries provides examples of what is studied. By grasping such competences the student can understand the effective behavior of the current enterprise more easily.
b. Applying knowledge and understanding. At the end of the course the students obtain competences about the features of an enterprise working in the international market (including public policies towards it) and attitudes to gain a job within the management of a multinational enterprise or within the board of a national or supranational institution actively dealing with enterprises.
c. Making judgements. By the course the students become able to make judgments allowing them to analyze and foresee the bunch of the conducts of the multinational enterprises and of the public policies towards them. Moreover the student presentations allows them to making judgements to choose the topic of their presentation and to present what they feel the more interesting issues.
d. Communication skills. The course instructs the students to deal with people within the multinational enterprise and to participate to the dialog between public boards and firms. Furthermore within the course from time to time a group of students has to present its contribution to the other students, and manage the discussion during the hour latterly. All this is expected to strengthen the communication skills of the students.
e. Learning skills. The course teaches the students how to learn, pushing them to search other-than-book information sources like newspapers or Internet sites and news; to listen to different speakers, and even to follow more advanced courses with a respectable level of independence.
Basic knowledge of financial mathematics. Suggested reading: D. Luenberger, "Investment Science", Oxford University Press, 1998, Chapter 2 "The Basic Theory of Interest".
Course contents summary
This course aims to help students understand the role and responsibilities of executives at banks and other financial institutions. We will examine the practices, procedures, traditional and state-of-the-art techniques and tools to manage a commercial bank. Particular attention is paid to current and future trends in banking, but analysis of the existing forces and changes in current banking will be examined along with recent changes in the Italian financial markets as well as the Italian capital markets as well as the US market. Emphasis will be made in the analysis of the following issues:
• The banking industry today and its changing environment.
• Assets, liabilities, and principles of bank management.
• Fundamentals of bank regulation.
• Banking risks and risk management, with a particular focus on credit risk.
The main aim of the course is to analyze the features and the behavior of the firms when acting on the international market as multinational enterprises. The course will pay attention also to the interactions between the firms and on the influences of the national and international institutions through industrial policies. In the final phase of the course the students hold presentations on issues analyzed during the lessons and regarding countries, industries or firms, all selected by them. The used language is English. The detailed contents are the following.
• The neoclassical theory of the firm and other models
• The structure of the market
• Strategic behavior
• Product differentiation
• Pricing policies and auctions
• Innovation strategies
• Horizontal and vertical m&a
• The multinational enterprises
• Global value chains
• Firm outsourcing and offshoring through input-output tables
• Energy and eco-innovations
• Industrial relationships within the multinational enterprises
• National industrial policies
• Policies to attract foreign investments
• International industrial policies
• The international economy during the crisis: a firm perspective
• Contributions by the students: single countries, industries, firms
L1. An Overview of Banking & the Changes in Financial – Service Sector.
L2. The Financial Statements of Banking and their Principal Competitors
L3. Measuring and Evaluating the Performance of Banks & their Principal Competitor
L4. Risk Management for Changing Interest Rates: Asset – Liability Management.
L5. Risk Management: Financial Futures, Options, Swaps & Other Hedging Tools
L6. Risk Management for Changing Interest Rates: Hedging using Duration Techniques
L7. The Investment Functions in Financial – Services Management & Liquidity, Reserve Management – Strategy & Policies
L8. Managing and Pricing Deposit Services
L9. Investment Banking, Insurance, and Other Sources of Fee Income Managing Nondeposit Liabilities
L10. The Management of Capital. Regulatory Capital
Topics to be covered in this subject will be centered around relevant textbook chapters. Lecture notes will provide students with major issues in banking & financial institutions. Additional materials may be provided to help students understand subject matters.
Peter Rose & Sylvia Hudgins. "Bank Management & Financial Services", 8th Edition. New York, 2010.
The same exam texts for attending people (i.e. students participating to the presentations), for Erasmus students and for non attending people:
A. Ninni, «Lessons of International Industrial Economics», e-book by Giappichelli (TO), 2015, (3 copies at the library of the University): http://www.giappichelli.it/lessons-of-international-industrial-economics... from the seminar of V. Valli about Japan or S. Korea;
slides from the seminar of G. Balcet about the global value chain in the “automotive” industry;slides from the seminar of A. Ninni about the global value chain in the photovoltaic industry;Arrighetti, E. Breda, R. Cappariello, M. Clemens, A. Ninni, D. Schumacher, “Competitiveness in manufacturing. Germany vs. Italy – a comparison”, wp of Dipartimento di Economia, http://swrwebeco.econ.unipr.it/RePEc/pdf/I_2012-01.pdf (only the contributions of Arrighetti-Ninni and Breda-Cappariello)
Lectures, exercises, discussions/presentations and analysis of specific cases based on newspaper articles.
Traditional lessons, presentations by the students, discussion of them.
Assessment methods and criteria
The intermediary reports should be written in maximum 5 pages and the final report should be written in 20-25 pages, Time News Roman font and size 12. Your group can study any banks: Italian, Vietnamese, US or France..(not exhautive)
The content should cover some main points as below:
• Introduction to bank structure (bank type, Board of Directors, Executives Boards, History, Subsidary banks; Main services of bank (Task 1).
• Analysis of bank performance (Task 2).
• Analysis of bank risks: Interest rate risks (Task 3).
• Analysis of bank capital: risk weighted assets components, CAR ratios, Tier 1, 2 Capital (Task 4).
This analysis will follow the theories, scheme given in the lectures and tutorials.
Can be done in group maximum 4 students.
Written exam (online). Knowledge and understanding, the ability to study in a largely autonomous manner, the ability to formulate judgements with incomplete data, and the ability to communicate conclusions. The application of knowledge and understanding through problem solving abilities in new or unfamiliar environment.
It will be a two-hour written examination. Final exam format will be discussed during revision in the last week of the semester.
During the exam devices such as smartphones, smartwatches, tablets, etc. are strictly forbidden. The final grade is published on Esse3.
Midterm Exam MCQs only (online)
1. Midterm Exam – 30%
2. Report (4 Tasks) – 40% - Final Report – Self group assessement students
3. Final Exam – 30% - Written or Oral (in case less than 5 students)
Written examinations test how the students learnt the course. The time for each examinations is two hours: the student has to answer to four open questions. So the knowledge and the comprehension of the issues are verified (point a): being open questions, also the way to apply them is tested (point b). Furthermore, as the opening of the questions involves more than one reply, the students can show their independence in judging (point c). The written examinations allow the teacher to test and possibly to rectify the communication skills of the student (point d), at least in the written form which is still the most diffused communication way in the world (when there is no strict closeness). Finally the student is requested also to apply himself to other presentations than those made by the teacher, that shows to have gained flexibility in learning (point e).