MSc Finance (major: Economic Policy)

This course examines the underlying principles and characteristics of banking and financial markets that are the foundation for understanding both their normal role in economies and the headline events. It concentrates on the theoretical and empirical scientific knowledge produced by modern research on banking. Since such knowledge is never fully established or ‘proven’, it enables the student to examine opposing points of view and to discuss the published studies.

Unit 1: Bank-Based vs Market-Based Financial Systems
Unit 2: Why do Banks Exist?
Unit 3: Why Banks Exist: Explanations Based on their Lending
Unit 4: Banks vs Capital Markets
Unit 5: Credit Rationing and Overlending
Unit 6: Bank Runs and Regulatory Responses
Unit 7: Financial Crisis
Unit 8: Portfolio Analysis

This course is concerned with the institutions of international finance and the key policy problems that have arisen in recent decades. It presents a policy-oriented perspective, similar to that an economist would use when advising governments on how to work within the modern international financial system and how to overcome its problems.

Unit 1: Evolution of the International Financial System
Unit 2: Foreign Exchange Markets
Unit 3: The Balance of Payments
Unit 4: Balance of Payments Policies - The Mundell-Fleming Approach
Unit 5: Balance of Payments Policies – The Monetary Approach
Unit 6: Fixed and Flexible Exchange Rate Systems
Unit 7: Currency Blocs, Financial Integration and International Co-ordination
Unit 8: Foreign Exchange Problems and Policies of Developing Countries

This course focuses on the relation between macroeconomic factors, macro economic policy and financial markets and institutions. Financial markets and institutions are treated as the central elements in the transmission of macroeconomic policy.

Unit 1: Macroeconomics and the World of Finance
Unit 2: Saving and Finance
Unit 3: Investment and Financial Markets
Unit 4: Monetary Policy and the Central Bank
Unit 5: Fiscal Policy and Government Finances
Unit 6: Expectations, Inflation, and Interest Rates
Unit 7: Foreign Exchange Markets and Foreign Trade
Unit 8: International Capital Flows and Financial Markets

This course looks at the principles economists use to model the behaviour of individual agents (firms, consumers, and policy authorities) and the ways in which they interact in a market economy. This course examines and builds upon core theories of microeconomics, and is structured around: market equilibrium; consumer demand; theory of the firm; pricing and output in competitive and monopolistic markets. The course explores the economic principles that underpin the influence of market structures - whether markets are competitive or monopolistic - on consumers and firms, how these principles can be applied to economic problems, and their implications for policy.

Unit 1: Theories and applications of microeconomics
Unit 2: Consumer Theory
Unit 3: Theory of Production and Costs
Unit 4: Profit Maximisation and Competitive Supply
Unit 5: Non-Competitive Market Structures
Unit 6: Factor Input Markets
Unit 7: General Equilibrium, Efficiency and Pareto Optimality
Unit 8: Externalities, Public Goods and Asymmetric Information

This course addresses the theory and practice of public finance with special reference to how governments raise revenues. It is concerned with taxation, borrowing and aid. There are economic principles that bear on the issues of financing public expenditure and these are covered in the course. If you have not studied economics before there is an Appendix that covers the relevant microeconomics concepts that underlie taxation theory. At the same time the course recognises that decisions on taxation, borrowing and aid are not taken solely with reference to economics but also to politics.

Unit 1: Tax Issues in Context
Unit 2: Taxation Incidence and Optimal Taxation
Unit 3: Policy Objectives and Taxation
Unit 4: Tax Policy Issues in Developing and Transition Countries (I)
Unit 5: Tax Policy Issues in Developing and Transition Countries (II)
Unit 6: Local Revenues in Developing and Transition Countries
Unit 7: Deficits and Debts
Unit 8: Foreign Aid and Debt Relief

Few countries have complete autonomy in macroeconomic policy. For many, policy is conducted in collaboration with the International Monetary Fund (IMF) or supervised by the IMF. The course examines the changing roles of the IMF, the nature of economic policies it encourages countries to pursue, and some of the effects these policies have on the economic environment of business, on the financial sector, and on social conditions. The course gives a simple introduction to the basic IMF economic policy framework, ‘financial programming’. Using different types of countries, including transition economies and developing countries as case studies, it enables students to study issues such as the role of capital controls and the problems of highly indebted countries.

Unit 1: Macroeconomic Stabilisation and the Role of the International Monetary Fund
Unit 2: The IMF’s Approach to Stabilisation
Unit 3: Alternative Approaches to Stabilisation
Unit 4: Stabilisation and the Financial Sector
Unit 5: Stabilisation Policy and the Financial Sector: Institutional Responses to Recent Crises
Unit 6: Stabilisation and the Financial Sector: Some Challenges and Controversies
Unit 7: Stabilisation and Low-income Countries
Unit 8: Challenges for Low-income Countries

This course concentrates on the principles of bank management of assets and liabilities. You will learn about the principles of bank balance sheet management and money market operations as well as liquidity ratios and capital adequacy ratios. You will also study issues of bank supervision and regulation.

Unit 1: Banking Innovations and Risk
Unit 2: Bank Accounts: A Useful Tool if Handled with Care
Unit 3: Bank Valuation
Unit 4: Bank Risk Management - Liquidity Management
Unit 5: Bank Risk Management - Interest Rate Risk Management
Unit 6: Cost of Funds and the Funding of Operations
Unit 7: Bank Risk Management - Credit Risk
Unit 8: Capital Management

The recent banking crisis has motivated heightened discussion of the merits of bank regulations used to minimise the risk of bank distress and intervention tools to mitigate its effects. In this course you will study technical aspects of bank regulation, supervision and intervention to resolve crises.

Unit 1: Principles of Bank Regulation
Unit 2: Banking Supervision & Regulation
Unit 3: The Prudential Supervision of Banks
Unit 4: Banking Crises: Weak Banks and Lender of Last Resort Support
Unit 5: Restructuring Failed Banks and Protecting Depositors
Unit 6: The Institutional Structure of Financial Regulation
Unit 7: Regulation, Supervision and Financial Stability
Unit 8: Issues in International Supervision and Regulation

This course enables you to relate principles and practice to the financing decisions of enterprises in modern economies. The course analyses the decisions firms make about financing their investments in productive capital.

Unit 1: Perspectives on Corporate Finance
Unit 2: Net Present Value and Capital Budgeting Decisions
Unit 3: Risk, Capital Market Equilibrium and Capital Budgeting Decisions
Unit 4: Efficiency of Capital Markets and Implications for Corporate Financing Decisions
Unit 5: Dividend Policy
Unit 6: Capital Structure I
Unit 7: Capital Structure II: Information Asymmetries and Agency Costs
Unit 8: Mergers

This course is specially designed for the postgraduate study of such areas as management, finance, financial law, corporate law, economics and related subjects, and has been designed to increase the depth of your understanding of corporate government issues. The course places a strong emphasis on the relationship between theoretical concepts and real world issues, making a real contribution to your in-depth understanding of the relevant corporate governance issues and future career development.

Unit 1: Introduction to Corporate Governance
Unit 2: Theory of the Firm
Unit 3: Corporate Governance and the Role of Law
Unit 4: Corporate Governance around the World
Unit 5: Board Composition and Control
Unit 6: CEO Compensation
Unit 7: International Governance
Unit 8: Overview of Corporate Governance Codes

The expansion of financial markets since 1973 has been founded on the growth of derivatives, both over the counter derivative contracts and exchange traded contracts. It was made possible by the development of models for valuing derivatives based upon the mathematics of stochastic calculus. In this course you learn the application of those principles to the valuation of derivatives.

Unit 1: Derivatives Contracts
Unit 2: Properties of Stock Options
Unit 3: The Behaviour of the Stock Price and the Black-Scholes model
Unit 4: Greek Letters and Trading Strategies
Unit 5: Interest Rate Models
Unit 6: Credit Derivatives and Credit Risk
Unit 7: Some Exotic Options
Unit 8: Further Numerical Procedures

This course provides an introduction to econometric methods, examining how we can start from relationships suggested by economic theory, formulate those relationships in mathematical and statistical models, estimate those models using sample data, and make statements based on the parameters of the estimated models. You are provided with Eviews econometric software as part of the course. We recommend that you take this course before progressing onto the more advanced sequel 'Econometric Analysis and Applications'.

Unit 1: Introduction to Econometrics and Regression Analysis
Unit 2: The Classical Linear Regression Model
Unit 3: Hypothesis Testing
Unit 4: The Multiple Regression Model - Estimation, Hypothesis Tests and Multicollinearity
Unit 5: Heteroscedasticity
Unit 6: Autocorrelation
Unit 7: Nonnormal Disturbances
Unit 8: Model Selection and Course Summary

'Econometric Analysis and Applications' is the second, more advanced, econometrics course offered to students wanting to broaden their understanding of the application of quantitative methods to economic inquiry. We recommend that you study the 'Econometric Principles and Data Analysis' course prior to this. The course assumes that you have studied the classical linear regression model at an introductory level and that you are familiar with the assumptions that underlie that model. You will be aware that there are many cases in which these assumptions are not satisfied, and know how such problems as heteroscedastic disturbances and autocorrelated errors can be detected, and what can be done about them. It is assumed, too, that you have a basic working knowledge of the econometric software, Eviews, introduced previously in 'Econometric Principles and Data Analysis', although basic instructions for using the program are provided here too.

Unit 1: Dummy Variables
Unit 2: Dynamic Models - Lags and Expectations
Unit 3: Simultaneous Equation Models
Unit 4: The Identification Problem
Unit 5: Simultaneous Equation Models - Estimation
Unit 6: Univariate Time Series - Stationarity and Non-stationarity
Unit 7: Multivariate Time Series Analysis
Unit 8: Forecasting

We define financial econometrics as 'the application of statistical techniques to problems in finance'. Although econometrics is often associated with analysing economics problems such as economic growth, consumption and investment, the applications in the areas of finance have grown rapidly in the last few decades.

Financial markets and others generate vast amounts of data on asset returns, their volatility, and other financial variables in long and high-frequency time series. The ability to analyse market behaviour requires knowledge of the properties of time series and appropriate estimation methods. Since the early 1980s techniques for analysing time series, which exhibit auto-regression, have yielded important studies of financial markets, increasing our knowledge of financial variables’ volatility. The objective of the course is to extend your knowledge and equip you with methods and techniques that allow you to analyse these finance-related issues.

Before starting this course, we recommend that you first complete 'Econometric principles and data analysis' [C330] and 'Econometric analysis and applications' [C332].

Unit 1: Statistical Properties of Financial Returns
Unit 2: Matrix Algebra, Regression and Applications in Finance
Unit 3: Maximum Likelihood Estimation
Unit 4: Univariate Time Series and Applications to Finance
Unit 5: Modelling Volatility – Conditional Heteroscedastic Models
Unit 6: Modelling Volatility and Correlations – Multivariate GARCH Models
Unit 7: Vector Autoregressive Models
Unit 8: Limited Dependent Variable Models

The main objective of the course is to enable you to understand some of the main characteristics of that globalised financial world. Because of the centrality of foreign exchange markets to international finance, we regard understanding foreign exchange markets as the core of that objective.

Unit 1: The International context of finance
Unit 2: The markets for foreign exchange
Unit 3: Exchange rates and prices
Unit 4: Exchange rates and interest rates
Unit 5: Managing foreign exchange exposure
Unit 6: International corporate financing and project finance
Unit 7: Capital structure and cost of capital in international financing
Unit 8: Corporate finance and currency crises

Modelling firms and markets is an introduction to the economics of information and uncertainty. Multi-person decision problems play a crucial role in industrial economics. This course begins with the basic concepts of game theory - the problems of decision-making under a multi-person environment. We will then examine the problems of private information and analyse the role of asymmetric information in market interactions, in particular the problems known as moral hazard (hidden actions) and adverse selection (hidden characteristics) under various economics contexts. You will learn how these informational problems affect the market outcome and if they lead to market inefficiencies, and if so, possible solutions.

Unit 1: Static Games of Complete Information
Unit 2: Dynamic Games of Complete Information
Unit 3: Static Games of Incomplete Information
Unit 4: Dynamic Games of Incomplete Information
Unit 5: Hidden Action (Moral Hazard)
Unit 6: Hidden Characteristics (Adverse Selection)
Unit 7: Auctions
Unit 8: General Competitive Equilibrium

This course examines the techniques and the foundation of risk management in corporations. It covers the use of derivatives, portfolio allocation, the value of risk, and the management of credit risk and operations risk. The course includes cases and applications.

Unit 1: Introduction to Risk Management
Unit 2: Portfolio Analysis
Unit 3: Management of Bond Portfolios
Unit 4: Futures Markets
Unit 5: Options Markets
Unit 6: Risk Management with Options
Unit 7: Value at Risk
Unit 8: Credit Risk

This is a course about financial and economic appraisal of projects. The project is a very specific element of the public policy and management mix. It normally consists of an investment, that is the creation of an asset which will generate benefits, financial and non-financial over a period of more than one year. This is not universally applicable as a working definition, as ‘project’ is often used to describe a set of discrete activities that do not always involve a capital investment, to achieve some specific goals. In this course, however, we will be dealing with capital investments.

This course will develop your research skills, which you can later apply to research projects. It will provide you with a thorough understanding of the theoretical concepts, methodological approaches and reporting issues that underpin good quality research projects, and has a specific emphasis on how to evaluate the merits of existing research. It is also a prerequisite if you have decided to write a dissertation.

Unit 1: The Nature of Research
Unit 2: Planning and Designing Research
Unit 3: Reviewing the Literature and Making Methodological Choices
Unit 4: Data
Unit 5A: Interviews, Focus Groups and Surveys
Unit 5B: Introduction to Data Analysis I
Unit 6A: Fieldwork and Observation
Unit 6B: Introduction to Data Analysis II
Unit 7: Validity and Reliability
Unit 8: Writing and Presenting Research

The dissertation is a supervised piece of research on a topic that we will agree with you. It should be 10,000 words long. Before we can consider your proposal to submit a dissertation, we will need to review you academic performance so far. Completion of the Research Methods course is a prerequisite for writing the dissertation.