EC/FI 358 - Financial Markets and the Economy

This course aims to deepen students’ understanding of the functions of financial markets and their critical interplay with the real economy. It offers an in-depth understanding of various financial instruments and their purpose, the elements of security pricing, and the roles of pivotal institutions in these markets.

The course also examines governmental policies affecting financial markets and addresses structural weaknesses within the financial system that lead to instability and market failures. Moreover, the course highlights the critical role of an efficient financial system in modern economies, incorporating case studies and recent events from the UK (for example, Brexit's implications) to demonstrate practical applications in the real world. Comparison will be made with the Eurozone and the USA, where necessary. 

The course covers the complexities of globalized money markets, including foreign exchange and Eurocurrency markets, while highlighting the significance of domestic market instruments in the context of monetary policy and economic stabilization.

The intricate world of capital markets is also explored, focusing on the financing needs of corporations and governments, the impact of innovative financial activities from junk bonds to more recent innovations in securitization, and the role of credit derivatives in recent financial crises. This detailed exploration gives students a rich understanding of financial markets and their fundamental role in shaping the economy. 

The course will include a visit to the currency Bank of England Museum, where students will gain firsthand experience of the UK's financial and central banking history.