This course focuses on the financial system and its role in economic development The first part explores the functions of finance, how it contributes to growth, and reviews different models of financial sector development and their influence on how governments viewed the sector. It will examine experiences with financial sector repression and subsequent liberalization, and investigate the causes and impact of financial crises. Then it will study how to make finance effective and how to prevent or minimize crises, analyzing government's role as regulator, supervisor, standard setter, contract enforcer, and owner. In this final part, attention will be devoted to the role of institutions (laws, norms, culture) and incentives in financial sector development. Format: lecture/discussion. Requirements: two short papers, midterm, and a final exam. Prerequisites: Economics 251, 252 and 509. Enrollment limit: 30 (expected: 25-30). Undergraduate enrollment limited and only accepted with instructor's permission.

Hour: CAPRIO