financial intermediation theory

This course is supported by OP Group Research Foundation

Time: August 1-3, 2023

Place: Otaniemi, Espoo, Aalto University School of Business

Instructor: Professor Itay Goldstein (Wharton School, University of Pennsylvania)

NFN Travel Grant: NFN offers Travel Grants for attending PhD students in finance coming from Nordic institutions outside of Finland. To apply for the Travel Grant, please use this this form, and send it to nfn (at)

Lectures: 12 h of lectures (12 x 45 minutes)

Tuesday 1.8.2023 12:00-13:30 & 14:00-15:30  V001, Ekonominaukio 1
Wednesday 2.8.2023 9:00-10:30 & 11:00-12:30 V001, Ekonominaukio 1
Thursday 3.8.2023 9:00-10:30 & 11:00-12:30 V001, Ekonominaukio 1

Course Objectives: Financial intermediation plays a critical role in improving economic efficiency. However, as past and recent experience demonstrates, it is also prone to fragility, leading to large crises that hurt the economy. I will review traditional and advanced theories of financial intermediation, trying to understand why intermediaries emerge, how they bring economic value, and why fragility is an inherent feature of intermediation. Key roles played by financial intermediaries that will be highlighted are liquidity provision, risk sharing, diversification, and monitoring. The dynamics leading to coordination failures and bank runs will also be analyzed in depth.  After presenting the theories, I will discuss implications for policy that is aimed at reducing fragility and evaluate the different tradeoffs involved. Finally, I will also discuss the link of the different theories to empirical evidence and identify challenges in distinguishing between the different mechanisms in the data.

Syllabus and Reading List: PDF

Access to the articles is subject to your home institutions' subsciptions to the databases. Hard copies of all readings are available for consultation at GSF office (Ekonominaukio 1, room T317)

Lecture Notes: PDF

Credit Units: 3 ECTS cr.

List of Participants: PDF

Participants: Doctoral students in Finance, Economics and related disciplines. The course is also open for KATAJA as well as FDPE and Helsinki GSE students with sufficient background in finance and/or economics. The course is also open for foreign doctoral students given that there is space in the course.


Grading: The grading will be based on a closed book written exam.

Examination date and time: Monday, August 28, at 12:00-15:00 in U262 KPMG, Otakaari 1 (Undergraduate Centre), Espoo. Please register for the exam through this link. The registration link will be closed one week prior to the exam

If you wish to take the exam in your home university (other than GSF member university), please see instructions below.

Examination places:

  • In Otaniemi: Aalto University School of Business
  • In Oulu: University of Oulu
  • In Vaasa: University of Vaasa
  • In Lappeenranta: Lappeenranta University of Technology
  • In Turku: Turku School of Economics
  • In Jyväskylä: University of Jyväskylä
  • Other locations: Doctoral students in other universities are requested to inform GSF by sending an e-mail to if they wish to take the exam in their home universities. Please note that the exam must be written in presence of an exam supervisor. Thus, please submit the name of the exam supervisor at least 14 days before the examination.

Please note: No retake exam will be offered for any reason (beyond your control or not). However, the exam can be taken abroad where suitable exam supervision can be arranged. Possible payment and arrangements for supervision should be made by the student. In case you wish to take the exam abroad, please contact GSF by sending an e-mail to at least 14 days before the examination


Registration / Application 

  • Doctoral students of GSF, FDPE and Helsinki GSE: Please register through this link
  • Doctoral students in related fields and doctoral students at foreign universities: Application form can be found here: PDF file or Word file. Please, send in addition to your complete contact information, a report on the status of your doctoral studies, and a brief CV. Please ask also your thesis advisor to send us a short letter of recommendation by-email. All the required documents should be sent by e-mail to All students will be informed of their acceptance soon after the deadline.
The deadline for registering in this course is June 29, 2023.