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1
EC2211
Financial Markets and
Institutions
Introduction and
Topic 1
Schedule –(subject to small changes)
•Lecture 1 –Intro. to the Financial System
•Lecture 2 –UK Intermediaries + Institutions
•Lecture 3 –Money and Money Markets
–Interest Rates
•Lecture 4 –Bond Markets
–Term Structure of Interest Rates
•Lecture 5 –Equity Markets
•Lecture 6 –GROUP EXERCISE 1
•Lecture 7 –Portfolio Theory
•Lecture 8 –Foreign Exchange Markets
–Derivatives
•Lecture 9 –GROUP EXERCISE 2
•Lecture 10 –Financial Market Efficiency
3
Assessment ‘16/’17
•70% final unseen exam ~ May
5% Online Test Week 2 (next week)
Based on Topic 1
5% Essay Week 5
Details on Moodle soon.
2.5% Group Test 1 Week 7
Based on all preceding material.
5% Online Test Week 9
Based on topic TBA
2.5% Group Test 2 Week 10
Based on topic TBA
10% Online Test Week 11
Based on all preceding material
Keep an eye out for announcements on Moodle
Reading:
No single book covers 100% of this course, closest is:
•Core Textbook
–Howells and Bain* (2008, 4e), The economics of money,
banking, and finance: a European text, Harlow,
Financial Times and Prentice-Hall. (3rd Edition is fine)
•Previous students have commented that this is heavy going, only
read the parts relevant to the lecture.
•Some of the more advanced topics are covered by:
–Hillier, et al (2013/2016, 2nd/3rd European Edition),
Corporate Finance, McGraw Hill.
Alternative Textbook (Does not cover all topics)
Modern Financial Markets & Institutions: a practical
perspective (2012) by Glen Arnold –this is available
through the library as an ebook.
*Do not confuse with another book by the same authors
called “Financial Markets and Institutions”.
5
Lecture 1 –Outline
Reading: Textbook (H+B) –Chapter 1 all, 2.1 2.2
•What is the financial system?
•Why do we need it?
–who are the users?
–why do they save or lend?
•What would happen without a financial
system?
•Classification of financial systems
Lecture 2 –Types of financial institutions
6
What is the Financial System?
•Definition:
‘A set of markets for financial instruments, and
the individual institutions who trade in those
markets, together with the regulators and
supervisors of the system.’
What does it do?
–Channels funds from lenders to borrowers
–Creates liquidity and money
–Provides a payments mechanism
–Provides financial services such as insurance &
pensions
–Offers portfolio adjustment facilities
•Who uses it?
What are Markets and Financial
Markets?
What is a fruit and vegetable market?
A place where buyers
and sellers of fruit and
vegetables get together
