Financial Institutions module (BU30014)

This module explores the modern financial system. We start with key institutions like commercial banks, investment firms, and central banks. We’ll understand the vital services they provide to individuals and economies worldwide. We will also analyse the costly imperfect information in the intermediation process.

Next, we’ll examine the markets where these institutions operate. We will look at the instruments they use and the different levels of financial risk. A key focus will be on interest rates - how central banks set them and how their changes affect demand.

We will also look at the rules and innovations that shape this financial system.

What you will learn

This module is designed to give you a solid understanding of the financial world. 

You will learn about:

• Financial Institutions: What banks, investment firms, and insurers do (e.g., manage funds, lend money, mitigate risk) and why individuals and entities use them.
• Central Banks: Their purpose and how they operate, and how the IS-LM-MP framework is used to set interest rates in the presence of financial markets.
• Markets & Risk: The different levels of risk in finance and how markets, instruments, and institutions interact.
• Financial Regulation: How rules and regulations affect the business strategies of large companies.
• Financial Innovation: The complex relationship between regulation and innovation.

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

• understand the role of financial institutions in the modern economy, and their importance towards reducing intermediation costs
• learn more about the problems of asymmetric information and how they impact the financial system
• learn about the rationale for some policy interventions in the sector

Assignments / assessment

• class test: 40%
• examinations: 60%

Teaching methods / timetable

You should expect weekly lectures and tutorials, preparing in advance to contribute to the class discussions which will also help you in completing your coursework.

There are 8 weeks of teaching. For this module, the exact dates of teaching and/or reading weeks are to be confirmed.