|We plan to cover three broad topics in this course: (1) theory of the firm; (2) the development of financial markets and its effects on real markets; and (3) financial intermediaries. We will start by trying to understand why firms exist. This will naturally lead on to questions about their organizational and control structures and about the way they are financed. Financial intermediaries play a key role in financing and we will attempt to understand why they are useful. Among the topics we will examine are the effects of financial contracts and intermediaries on incentives, commitment, and the liquidity of markets and the chance of a financial crisis.
This course is intended for Ph.D. students and advanced M.B.A. students who have a substantial understanding of formal economics and some basic game theory.