Financial Markets: Institutions and Instruments

Department:
Department of Economics
Program:
МА «Финансовая экономика»; MA «Исследовательская экономика»
Semester:
2
Credits:
2

Course description

The course aims to introduce basic notions related to modern financial system. The students will learn the differences between financial markets, financial institutions and financial instruments and how they jointly form the financial system. During the course the students will learn basic financial instruments and their specific features, will master basic financial calculations and understand the basics of forming investment portfolios. The students will learn about formal and shadow parts of the financial markets, about banking and non-banking institutions, and how regulators have to find the midway between regulation and freedom.

 

Course topics

Topic 1. Introduction and Overview of Financial Markets

  • Overview of financial markets
  • Determinants of interest rates
  • Interest rates and security valuation
  • Central banks (the US Federal Reserve System, European Central Bank, CBJ, CBC, CBR)
  • Monetary policy and the role of interest rates targeting

 

Topic 2. Securities Markets

  • Money markets
  • Bond markets
  • Mortgage markets
  • Stock markets
  • Foreign exchange markets
  • Derivative securities markets

 

Topic 3. Commercial Banks

  • Commercial banks
  • Commercial banks' financial statements and analysis
  • Regulation of commercial banks

 

Topic 4. Other Financial Institutions

  • Other lending institutions: savings institutions, credit unions, and finance companies
  • Insurance companies
  • Securities firms and investment banks
  • Mutual funds and hedge funds
  • Pension funds

 

Topic 5. Risk Management in Financial Institutions

  • Types of risks incurred by financial institutions
  • Managing credit risk on the balance sheet
  • Managing liquidity risk on the balance sheet
  • Managing interest rate and insolvency risk on the balance sheet
  • Managing risk off the balance sheet with derivative securities
  • Managing risk off the balance sheet with loan sales and asset securitisation

 

 

Literature

  • Mishkin F. S., Eakins S. Financial Markets and Institutions, 7th (international) ed. Pearson Education, 2011.
  • Saunders A., Cornett M. M. Financial Markets and Institutions, 4th (international) ed. McGraw-Hill Higher Education, 2008.