Financial Intermediaries, Instruments and Markets
Essex Business School
Undergraduate: Level 5
Monday 13 January 2020
Friday 20 March 2020
10 October 2019
Requisites for this module
BE300 or EC111 or IA712
BSC N390 Banking and Finance,
BSC N392 Banking and Finance (Including Placement Year),
BSC NH90 Banking and Finance (Including Year Abroad)
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 aim of this course is two-fold. First, to familiarize you with the functions of the main financial markets. Second, to ensure you have an understanding of how the main financial intermediaries perform their roles and of the types of instruments employed by these financial intermediaries in the financial markets.
On successful completion of the module, students will 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)
The module, class activities and coursework will help you to develop the following transferable skills:
a) choose amongst different employment prospects in financial intermediaries.
b) identify technical requirements and job specifications of careers in finance.
c) intra- and interpersonal communication via a group presentation and report.
d) select and process relevant information from case material and reports.
e) contextualise the role of financial intermediaries within law and regulation.
There will be one lecture per week, each of two hours duration, for ten weeks. 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. The likely lecture program is described further below.
There will be one workshop every second week associated with the lectures, each of one-hour duration and 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 year's cohort, in aggregate
- Arnold, Glen. (2012) Modern financial markets and institutions: a practical perspective, Harlow: Financial Times Prentice Hall.
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
||Group Oral Presentation
||120 minutes during Summer (Main Period) (Main)
Module supervisor and teaching staff
Senyu Wang, Hardy Thomas
Dr Apostolos Kourtis
The University of East Anglia
Senior Lecturer in Finance
Available via Moodle
Of 45 hours, 45 (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).
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