Economics of Money, Banking and Financial Markets
Module overview
This is a Level 5 core module for the course BSc Economics, Finance and Banking. This is an optional module for Level 6:
- BA Economics and Management
- BA European Business
- BSc Business Economics
- BSc Economics
There are no prerequisites to attend this course, as students will have studied relevant introductions to macroeconomics and quantitative methods at level 4.
This module is a very popular option at level 5 as it provides wide and strong foundations in the area of banking, financial markets, central banking and monetary policy.
The content of this module is delivered over two separate streams:
- Monetary Policy (MP) - This stream deals with the role of central banks and monetary policy and their impact on the economy. This stream introduces a limited number of formal (mathematical) models and relies mostly on the logical development of arguments
- Financial Markets (FM) - This stream deals with the general structure, functioning and management of financial markets and institutions, including risks, regulations and crises. This stream introduces a number of formal (mathematical) models and relies on the understanding of their logic and on the ability to apply them to realistic scenarios.
Aims
To appreciate:
- the structure, conduct and performance of banking and financial markets
- the role of financial regulation
- the role of central banks
- the scope of monetary policy
Learning outcomes
On successful completion of this module, students should be able, at threshold level, to:
- Articulate and explain the structure, conduct and performance of banking and financial markets.
- Articulate and explain the role of money and the principles, conduct and effects of monetary policy in the economy
- Translate real world problems into analytical models and vice versa and employ appropriate analytical techniques to graphically and mathematically study and critically assess money, banks and financial markets
- Review academic literature relating to money, banking and finance in order to make policy recommendations and assessments
- Translate real world problems into analytical models and vice versa and employ appropriate analytical techniques to graphically and mathematically study money, banks and financial markets.
- Review academic literarure relating to banking and finance in order to make policy recommendations.
Teaching and planned activities
The module is delivered via a combination of 22 lectures and 22 seminars over one term of 11 weeks. The programme is structured such that the two streams (Financial Markets and Monetary Policy) are delivered in parallel.
Lectures concentrate on introducing concepts,theories, information and practices relevant to international banking and financial instruments.
Seminars are structured to develop an understanding of the material introduced in the lectures, to offer opportunities for formative assessment in practicing techniques introduced in the lectures and to critically review contemporary issues.
Assessment
- Coursework 1 (FM) - 40%
- One 1,500-word individual essay that addresses the learning outcomes 1 - 6.
- Coursework 2 (MP) - 40%
- One 1,500-word individual essay that addresses the learning outcomes 1 - 6.
- Coursework 3 (FM - MP) - 20%
- A portfolio of tasks including one 500-words individual essay and two online quizzes that address the learning outcomes 1 - 6.
Programme outline
Financial Markets
| Week | Lecture | Seminar |
|---|---|---|
| 1 | Why Study Money, Banking, and Financial Markets? | Introduction to the assignment |
| 2 | An Overview of the Financial System, introduction to interest rates | Why Study Money, Banking, and Financial Markets? |
| 3 | Stock Market, Rational markets, EMH | An overview of the Financial System, introduction to interest rates |
| 4 | Banking and the Management of Financial Institutions I | Stock Market, Rational markets, EMH |
| 5 | Banking and the Management of Financial Institutions II | Banking and the Management of Financial Institutions I |
| 6 | Banking and the Management of Financial Institutions III | Banking and the Management of Financial Institutions II |
| 7 | Financial regulation and banking industry: structure and competition | Banking and the Management of Financial Institutions III |
| 8 | Financial crises | Financial regulation and banking industry: structure and competition |
| 9 | An economic analysis of financial structure | Financial crises |
| 10 | Alternative banking | An economic analysis of financial structure |
| 11 | Reflection and revision | Alternative banking |
Monetary Policy
| Week | Lecture | Seminar |
|---|---|---|
| 1 | Central Banks | Introduction |
| 2 | The money supply process I | Central Banks |
| 3 | The money supply process II | The money supply process I |
| 4 | The tools of monetary policy | The money supply process II |
| 5 | The conduct of monetary policy | The tools of monetary policy |
| 6 | The demand for money | The conduct of monetary policy |
| 7 | The ISLM | The demand for money |
| 8 | Monetary and fiscal policy in the ISLM | The ISLM |
| 9 | The AS/AD | Monetary and fiscal policy in the ISLM |
| 10 | Transmission mechanisms | The AS/AD |
| 11 | Review of the core topics | Transmission mechanism |
Reading list
We will use the following textbooks for general reference and will access original sources (banks, central banks, the Bank for International Settlements, the IMF, the World Bank, the OECD and S&P Global) to find current data and other relevant information on the various topics of the programme.
- Bikker, J, Boss, J. (2008). Bank performance. Taylor and Francis
- Casu, B, Girardone, C, Molyneux, P. (2015). Introduction to banking (2nd edition). Pearson
- Duffie, D. (2010). How big bank fails and what to do about it. Princeton University Press
- Gan, C, Nartea, G. (2017). Microfinance in Asia. World scientific publishing company
- Giuliodori, M, Matthews, K, Mishkin, F. (2013). The economics of money, banking and financial markets (European edition). Pearson
- Hull, J. (2018). Risk management in financial institutions (5th ed.). Wiley
- Mishkin, F. (2018). The economics of Money, banking and financial markets (12th edition, Global Edition). Pearson