Financial Markets and Monetary Policy

The details
Essex Business School
Colchester Campus
Undergraduate: Level 6
Thursday 08 October 2020
Friday 18 December 2020
25 June 2020


Requisites for this module
BE300 or EC111 or IA712



Key module for

BSC N390 Banking and Finance,
BSC N391 Banking and Finance (Including Foundation Year),
BSC N392 Banking and Finance (Including Placement Year),
BSC NH90 Banking and Finance (Including Year Abroad)

Module description

This course explores the links between money, financial intermediaries, financial markets and the policies that affect them. In particular, it focuses on the effects of monetary policy on financial markets and through them on the economy as a whole. Special emphasis will be made on expectations and the role of policy communication in these effects.

Module aims

• To provide students with an understanding of how interest rates, money supply and central bank actions affect the decisions of economic agents, financial markets and prices • To develop an understanding of objectives, functions, and operations of central banks in financial markets • To introduce students to a number of recent developments and policy debates regarding financial markets and monetary regulation

Module learning outcomes

On successful completion of the module, students will be able to: • Explain how the interest rates are determined, what factors affect them and what are the risk and term structure of interest rates • Apply the concepts of rational expectations and efficient financial markets to analyse the effects of monetary policy • Identify principal objectives of central banks and forecast their possible market interventions in response to asset price movements and other market changes • Explain the role of financial institutions for the various channels of monetary policy transmission and derive the implications of monetary policy actions for financial markets

Module information

Skills for Your Professional Life (Transferable Skills)

* Develop your digital/technical fluency through the use and application of MS Excel (or equivalent software) computing and graphical functions to real-life data
* Enhance your written communication skills through putting together a research report / an essay * Improve your oral communication skills by making short presentations / communications in the classes * Improve your analytical (research) and problem-solving skills by applying models to explain trends in the data and answer model questions. * Develop your critical thinking by critically evaluating existing models and their applicability to the real-life data.

Learning and teaching methods

This Module is normally delivered through: A two-hour lecture per week for ten consecutive weeks and 1 class fortnightly. You need to attend all the lectures and classes. You are expected to do relevant reading and preparation before the lecture. It is strongly recommended that also you do additional reading to supplement the lecture material. In addition, you are expected to sign up for one tutorial group only and always go to the same tutorial group. Finally, there is a revision session in the summer term. In academic year 2020-2021 the delivery is likely to be different and involve online learning.


  • Mishkin, Frederic S. (c2016) The economics of money, banking, and financial markets, Harlow: Pearson Education Limited.

The above list is indicative of the essential reading for the course. The library makes provision for all reading list items, with digital provision where possible, and these resources are shared between students. Further reading can be obtained from this module's reading list.

Assessment items, weightings and deadlines

Coursework / exam Description Deadline Weighting
Coursework   Assignment     
Exam  120 minutes during Summer (Main Period) (Main) 

Overall assessment

Coursework Exam
30% 70%


Coursework Exam
30% 70%
Module supervisor and teaching staff
Dr Ming-Tsung Lin, email:
Ming-Tsung Lin & Xiangshang Cai



External examiner

Prof Christos Ioannidis
Aston University
Available via Moodle
Of 42 hours, 42 (100%) hours available to students:
0 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).


Further information
Essex Business School

* Please note: due to differing publication schedules, items marked with an asterisk (*) base their information upon the previous academic year.

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