Postgraduate Course: Perspectives on Financial Innovation: Markets, Technologies, and Policies (CMSE11496)
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 | 10 |
ECTS Credits | 5 |
| Summary | Financial markets have been radically transformed in recent decades through the development of new financial products, services, and technologies. This course will provide students with the knowledge and skills necessary to understand the social, political/regulatory, and technological causes of these developments, as well as their impacts on financial markets and broader society. |
| Course description |
Financial markets are continually transformed through the development of new financial products, services, and technologies. While FinTech represents the latest wave of financial innovation, earlier decades saw the development of swaps and options, exchange-traded funds, mortgage securitization, algorithmic trading, as well as novel risk management techniques such as portfolio insurance. This course is designed to provide students studying on the Finance, Technology and Policy MSc programme with the knowledge and skills necessary to critically examine both the social, political, and technological drivers of financial innovation, as well as the consequences of financial innovation on markets, institutions, and broader society. The course addresses these topics first by studying a number of historical episodes of financial innovation as well as current FinTech developments through an interdisciplinary lens. Thus, while the course is grounded in the economics literature on financial innovation, it also draws on concepts and theories from strategic management, economic sociology, and science and technology studies. At the end of the course, we will apply these perspectives to present-day developments in the FinTech space.
Outline Content:
1. What is financial innovation? The classic perspective from financial economics
2. Materialist perspective: Financial innovation as novel market devices and infrastructures
3. Institutionalist perspective: How politics and culture shape financial innovation, and vice-versa.
4. Bringing the various perspectives together: the rise and fall of 'sub-prime' mortgage finance
5. Financial innovation as the transformation of financial institutions: Examining the automation of financial markets
6. Financial innovation and FinTech: Emerging Issues
Student Learning Experience:
Tutorial/seminar hours represent the minimum total live hours - online or in-person - a student can expect to receive on this course. These hours may be delivered in tutorial/seminar, lecture, workshop or other interactive whole class or small group format. These live hours may be supplemented by pre-recorded lecture material for students to engage with asynchronously.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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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:
- Exhibit a critical understanding of different concepts and theories that economists, management scholars, and sociologists have used to understand innovation, and financial innovation in particular.
- Understand various mechanisms through which government policy and regulation can shape the rate and direction of financial innovation.
- Understand (at a broad level) the major financial innovations that have emerged in recent decades, and the effect that these innovations have had on markets and broader society.
- Make sophisticated use of relevant concepts and theories from the academic literature on financial innovation to assess the consequences of new financial products and technologies on financial markets, institutions, and broader society.
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Reading List
Castelle, Michael, Yuval Millo, Daniel Beunza, and David C. Lubin. 2016. 'Where Do Electronic Markets Come from' Regulation and the Transformation of Financial Exchanges'. Economy and Society 45 (2): 166-200. https://doi.org/10.1080/03085147.2016.1213985.
Funk, Russell J, and Daniel Hirschman. 2014. 'Derivatives and Deregulation': Financial Innovation and the Demise of Glass - Steagall. Administrative Science Quarterly 59: 669-704. https://doi.org/10.1177/0001839214554830.
Garcia-Macia, Daniel, Chang-Tai Hsieh, and Peter J. Klenow. 2019. 'How Destructive Is Innovation? Econometrica 87 (5): 1507-41. https://doi.org/10.3982/ECTA14930.
Lerner, Josh. 2006. 'The New New Financial Thing: The Origins of Financial Innovations'. Journal of Financial Economics 79 (2): 223-55. https://doi.org/10.1016/j.jfineco.2005.01.004.
MacKenzie, Donald, and Yuval Millo. 2003. 'Constructing a Market, Performing Theory: The Historical Sociology of a Financial Derivatives Exchange'. American Journal of Sociology 109 (1): 107-145. https://doi.org/10.1086/374404.
MacKenzie, Donald, and Juan Pablo Pardo-Guerra. 2014. 'Insurgent Capitalism: Island, Bricolage and the Re-Making of Finance'. Economy and Society 5147 (May): 1-30. https://doi.org/10.1080/03085147.2014.881597.
Merton, Robert C. 1995. 'Financial Innovation and the Management and Regulation of Financial Institutions'. Journal of Banking & Finance 19 (3-4): 461-481. https://doi.org/10.1016/0378-4266(94)00133-N.
Muniesa, F., D. Chabert, M. Ducrocq-Grondin, and S. V. Scott. 2011. 'Back-Office Intricacy: The Description of Financial Objects in an Investment Bank'. Industrial and Corporate Change, May, 1-25. https://doi.org/10.1093/icc/dtr020.
Omarova, Saule T. 2019. 'New Tech v. New Deal: Fintech as a Systemic Phenomenon'. Yale Journal on Regulation; New Haven 36 (2): 735-93.
Philippon, Thomas. 2015. 'Has the US Finance Industry Become Less Efficient' On the Theory and Measurement of Financial Intermediation. The American Economic Review; Nashville 105 (4): 1408-38. http://dx.doi.org.ezproxy.is.ed.ac.uk/10.1257/aer.20120578.
Poon, Martha. 2009. 'From New Deal Institutions to Capital Markets: Commercial Consumer Risk Scores and the Making of Subprime Mortgage Finance'. Accounting, Organizations and Society 34 (5): 654-674. https://doi.org/10.1016/j.aos.2009.02.003.
Rajan, Uday, Amit Seru, and Vikrant Vig. 2015. 'The Failure of Models That Predict Failure: Distance, Incentives, and Defaults'. Journal of Financial Economics 115 (2): 237-60. https://doi.org/10.1016/j.jfineco.2014.09.012.
Resource List:
https://eu01.alma.exlibrisgroup.com/leganto/public/44UOE_INST/lists/31908909310002466?auth=SAML |
Additional Information
| Graduate Attributes and Skills |
Knowledge and Understanding
After completing this course, students should have:
- A critical understanding of different concepts and theories that economists, management scholars, and sociologists have used to understand innovation, and financial innovation in particular.
- Critical knowledge and understanding of the various mechanisms through which government policy and regulation can shape financial innovation.
- A critical appreciation for the major financial innovations that have emerged in the last forty years, and the effect that these innovations have had on markets and broader society.
Practice: Applied Knowledge, Skills and Understanding
After completing this course, students should be able to:
- Apply various perspectives from the academic literature on innovation from economics, management, and sociology to critically assess the potential social and economic impacts of novel financial products and technologies
Cognitive Skills
After completing this course, students should be able to:
- Make informed judgements about the social, political, and technological drivers of particular innovations in finance, as well as their potential effects.
Communication, ICT, and Numeracy Skills
After completing this course, students should be able to:
- Communicate technical, conceptual and critical information clearly and concisely in writing.
Autonomy, Accountability, and Working with Others
- Work in a peer relationship to develop a presentation of research findings. |
| Keywords | Not entered |
Contacts
| Course organiser | Dr Taylor Spears
Tel: (0131 6)51 1057
Email: Taylor.Spears@ed.ac.uk |
Course secretary | Mrs Kelly-Ann De Wet
Tel: (0131 6)50 8071
Email: K.deWet@ed.ac.uk |
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