Section outline

  • A.Y. 2016-17 / First semester - 6CFU

    Course objective

    This course aims at introducing the functioning of financial markets and their economic role, by focusing on main financial institutions, as well as products and services that they provide. The course will adopt an international perspective, by focusing on US and European markets and by considering interactions between intermediaries and markets on a global scale.

    Participants will be able to understand the rationale for the existence of financial markets and related institutions, the prevailing limitations to their effective functioning as well as the overarching issues linked with their management and regulation, both on a qualitative and a quantitative basis.

    Contents

    Part A: Financial Markets

    1. Overview of the financial system
    2. I nterest rates: economic and financial role, determinants and structure
    3. Efficiency of financial markets: evidence and economic consequences
    4. Money markets and money instruments
    5. Bond market and bond evaluation
    6. Stock market and stock evaluation
    7. An introduction on mortgage markets
    8. The foreign exchange market

    Part B: Financial Institutions

    1. The economic role of financial institutions
    2. The nature of financial crises and their effects on economy
    3. An introduction on central banking, monetary policy and the international financial system
    4. Banks: structure, role, performance and competition
    5. Mutual funds
    6. Insurance companies and pension funds
    7. The securities’ industry
    8. An introduction on risk management of financial institutions and hedging
    9. Overview of other financial intermediaries: cooperative/mutual banks, mutual guarantee credit institutions, finance companies
    10. An introduction on financial regulation

    Prerequisites

    Accounting is a mandatory prerequisite. To better understand the aforementioned topics, attendance of Macroeconomics and Financial Mathematics courses is strongly suggested.

    Teaching methods

    Front lessons and class discussions. Individual learning is encouraged by reviewing questions and exercises provided by the textbook and its online self-assessment materials. Keeping up-to-date on financial and economic news, as provided by specialised media (f.i. Financial Times, The Economist, etc.), is strongly suggested.

    Assessment

    Final exam, composed of two parts:

    • A short multiple choice test, with 20 questions and only one correct answer. Scoring is attributed as follows: 1 point per correct answer, 0 points per blank answer, -1 points for every mistake. The test is considered passed with a score greater or equal 10 points.
    • Students passing the test can access the oral exam, based on 3 questions that will start from a topic selected by each student. The final grade will be based on the oral exam only (i.e. the test itself does not matter).

    The evaluation process is mainly based on the following assessment:

    • lower grades are attributed to students that show a sufficient knowledge of this course's topics, as well as a satisfactory use of technical language
    • intermediate grades are attributed to students that show a higher degree of knowledge, in particular the ability to cross-reference different topics and their mutual relationships, as well as a good proficiency in the technical language
    • higher grades are attributed to students that, together with a deep knowledge of this course's topics and a distinguished proficiency in the technical language, can prove to be able to apply concepts and tools to real-world situations.

    References

    Mishkin F.S. and Eakins S.G. (2015), Financial markets and institutions, Pearson, 8th Edition

    Online material provided by textbook

    Lecturer’s notes will be provided during the course.

    Further readings on specific topics can be suggested on demand.