Module Directory

At the heart of all modern economies lies a sophisticated network of financial intermediaries whose primary function is the collection of savings from households and their subsequent allocation to organizations that need this financing.

We now have a better understanding of financial intermediation stemming from two new developments over the last 30 years. First, innovative financial contracts, well-forged financial institutions and the genesis of new financial markets have come to dominate most economies today. Second, increasingly sophisticated devices such as provided by option pricing models, information-theoretic tools and strategic interaction models have facilitated the introduction of a scientific approach to studying the issues raised by these new developments.

About these financial intermediaries we ask (1) who are they? (2) what do they do? (3) why do they exist? There are two main types of financial intermediaries: depository and non-depository intermediaries. Financial intermediaries provide two main services: brokerage services and qualitative asset transformation services and justify their existence from being able to supply such services more efficiently than financial markets. We then ask what instruments and markets are utilized in the qualitative asset transformation process. The five main financial markets and instrument classes are: equities, bonds, currencies, derivatives and commodities. Naturally, financial crisis, fraud and controversy are among the issues associated with the increasing regulation of global financial markets today and the banking sector and financial markets are among the most regulated parts of every economy. We examine some of the issues.

The aims of this module are:

• To familiarize you with the functions of the main financial markets.


• To ensure you understand how the main financial intermediaries perform their roles and the types of instruments employed by these financial intermediaries in the financial markets.

By the end of this module, students will be expected to be able to:

1. Distinguish between retail and investment banking.


2. Distinguish between pension funds, private equity and hedge funds.


3. Understand the role of insurance firms, pension funds, leasing and factoring firms.


4. Recognise the importance and functions of money and capital markets.


5. Identify and explain the main financial instruments traded on financial markets.


6. Appraise the current issues affecting the global financial marketplace.

Skills for Your Professional Life (Transferable Skills)

This module, class activities and coursework will help you to develop the following transferable skills:

1. Choose amongst different employment prospects in financial intermediaries.


2. Identify technical requirements and job specifications of careers in finance.


3. Intra- and interpersonal communication via a group presentation and report.


4. Select and process relevant information from case material and reports.


5. Contextualise the role of financial intermediaries within law and regulation.

This module will be delivered via:

• One 2-hour lecture per week.
• One 1-hour workshop per fortnight.

Lectures
The primary function of the lecture is to introduce a topic and the main ideas and issues relating to the topic. Lectures are not the venues for describing computational details (for that we use classes). You are expected to do the relevant reading before the lecture. It is strongly recommended, however, that this should not be the only time you stumble on to the relevant material.

Workshops:
The workshop will lag the lectures. For these fortnightly workshops, exercises will normally be released before the relevant workshop but after lectures. You are advised to attempt all the workshop material, so that you will have a better understanding of the solutions and ideas discussed there. Your workshop attempt will need to be handed in at the workshop but they are neither marked nor evaluated and serve the important role of feedback to faculty, concerning the progression of this years cohort, in aggregate.