Money and Banking
Module Code: EC302C
Module Title: Money and Banking
- ECTS Weighting: 5
- Semester/Term Taught: Hilary Term
- Contact Hours: 22 hours of lectures and 5 hours of tutorials
- Module Personnel: Lecturer - Agustin Benetrix
On successful completion of this module, you will be able to:
- Discuss the recent performance of financial markets and government intervention strategies in light of economic theory;
- Describe recent trends in the organization of the financial industry and recognize the main microeconomic theories of banking;
- Examine the nature of money, definitions of the money supply and different approaches to determining how the money supply is created;
- Explain monetary theory and its relevance to macroeconomic policy against the background of the main financial institutions and markets;
- Discuss current issues in relation to the formulation and operation of monetary policy;
- Describe the main financial instruments and the way in which they help redistribute risk between economic agents.
The second half of this module is formed by three pillars. The first one will introduce the core principles of banking and present an overview of financial instruments, financial markets and financial institutions. The second pillar will study fundamental concepts such as value and present value, risk and term structure, bonds, interest rate determination, stock markets, market efficiency, derivatives and foreign exchange. We will study how market interest rates are determined. The third pillar will put the focus on the economic theory behind financial intermediaries. We will discuss how the financial system can mitigate problems related to asymmetric information. This part of the module will also cover bank risk management, bank runs and financial crises.
Recommended Reading List
- Cecchetti, Stephen G. and Schoenholtz, Kermit L. Money, Banking and Financial Markets 3rd ed. (McGraw-Hill, 2011)
- Matthews, Kent and John Thompson. The Economics of Banking, 2nd ed. (Wiley, 2008)
- Feixas, Xavier and Rochet, Jean-Charles. Microeconomics of Banking, 2nd ed. (MIT Press, 2008)
NB: Additional readings will be suggested in lectures
Module Pre Requisite
EC2010 and EC2040
There will be an assignment accouting for 20% of the overall grade and an annual examination accounting for 80% of the overall grade.