Postgraduate Course: Economic Analysis of Money and Banking (CMSE11317)
Course Outline
| School | Business School |
College | College of Arts, Humanities and Social Sciences |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
| SCQF Credits | 15 |
ECTS Credits | 7.5 |
| Summary | This course provides economic insights and analytical tools for better understanding of money and banking with a special emphasis on economic agents' strategic interactions. Based on various economic models, a broad range of practical applications and policy implications in the area of banking and financial system will be discussed. |
| Course description |
During the last couple of decades, the financial system has been drastically changed. In highly competitive environments banking services have been diversified and the boundary between traditional banks and other financial institutions has been blurred. Various new financial instruments have been developed for risk management and banks' business has become more complex and opaque. After the systemic financial crisis in 2008 and 2009, deregulation of banking and reintroduction of firewalls among financial institutions are required and the financial system become more complicated, but the threat of financial crisis still exists.
In such changing environments, for the students as prospective managers particularly in banking and financial sector, it is imperative to foster their analytical ability to understand the foundations of financial system. To analyse the underlying forces behind the changes and cope effectively with them, economic agents' interactions should be taken into account particularly in which each agent has different pieces of information and makes a decision strategically.
The main objectives of the course are to:
1. Introduce quantitative framework to understand the foundations of financial system;
2. Provide rigour analytical models to investigate economic agents' strategic interactions in financial system;
3. Help students to apply theoretical economic models into practical situations and to draw meaningful policy implications.
|
Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
|
Co-requisites | |
| Prohibited Combinations | |
Other requirements | None |
Course Delivery Information
| Not being delivered |
Learning Outcomes
On completion of this course, the student will be able to:
- Understand the mechanism of money as a medium of exchange and critically discuss whether money is essential in economy
- Understand the consequences of asymmetric information in financing and critically discuss why banks exist as financial intermediaries
- Understand how banks compete with each other and critically discuss the implications of competition policies
- Understand the role of central banks as a conductor of monetary policy and critically discuss time-inconsistency problem in monetary policy
- Understand why bank runs and financial contagion happen as an equilibrium phenomenon and critically discuss how regulation can mitigate the financial fragility and contagion
|
Reading List
Selected articles from academic journals and chapters from the following books:
Nosal, E., & Rocheteau, G. (2011). Money, payments, and liquidity. MIT press.
Freixas, X., & Rochet, J. C. (2008). Microeconomics of banking (2nd Ed). MIT press. |
Additional Information
| Graduate Attributes and Skills |
Knowledge and Understanding
On completion of the course students should be able to:
- Understand the mechanism of money as a medium of exchange
- Understand the roles of money in macroeconomic perspectives
- Understand the consequences of asymmetric information in financing
- Understand why banks exist as financial intermediaries
- Understand how banks compete with each other
- Understand the role of central banks as a conductor of monetary policy
- Understand time-inconsistency problem in monetary policy
- Understand why bank runs are inherent to the nature and how financial contagion happen as an equilibrium phenomenon
- Understand how regulation can mitigate the financial fragility and contagion
Application
On completion of the course students should be able to apply the economic models into various practical situations, including
- Alternative forms of money and their practical uses
- Central banks' monetary policy
- Commercial banks' competition policy
- Critical review on recent bank failures and financial crises
Cognitive Skills
On completion of the course students should be able to:
- Identify the rationale of the assumptions behind economic models
- Describe how the assumptions play in a specific model
- Critically evaluate the appropriateness of the assumptions in practical applications |
| Keywords | Not entered |
Contacts
| Course organiser | Dr Joosung Lee
Tel: (0131 6)51 1375
Email: Joosung.Lee@ed.ac.uk |
Course secretary | Mrs Kelly-Ann De Wet
Tel: (0131 6)50 8071
Email: K.deWet@ed.ac.uk |
|
|
University Homepage