| Unit name | Financial Crises |
|---|---|
| Unit code | EFIM30018 |
| Credit points | 10 |
| Level of study | H/6 |
| Teaching block(s) |
Teaching Block 1 (weeks 1 - 12) |
| Unit director | Professor. George Bulkley |
| Open unit status | Not open |
| Pre-requisites |
None |
| Co-requisites |
None |
| School/department | School of Accounting and Finance - Business School |
| Faculty | Faculty of Social Sciences and Law |
The unit will cover the causes, consequences, and appropriate policy relating to credit crises. Most of your work on asset pricing assumes efficient markets. Recent events cast doubt on the macro rationality of markets. We start with an examination of the UK credit crisis. We will look at the background and discuss who the players were. To what extent were bankers, the regulators or the government responsible? What were these securities that precipitated the crisis and why did the markets in them collapse leading to a crisis of liquidity.
We then identify the elements in the UK crisis that are common to similar crises around the world and in history. Is the UK crisis part of a general pattern? We examine other financial crises that have been seen in the last century. We look at problems of asset price bubbles and speculation, bank runs, liquidity, the role of credit in business cycles, the role of financial intermediation.
We then turn to the future and consider what the government response should be in the short term and how regulation might be tightened so that in the long run a crisis is less likely to recur.
On successful completion of this unit a student will be able to:
10 hours of lectures, 5 fortnightly tutorials.
Formative: Essay of approximately 1500 words
Summative: 100% 1.5 Hour exam
All learning objectives are assessed by both summative and formative assessment
“Deciphering the Liquidity and Credit Crunch 2007–2008”, Markus K. Brunnermeier, Journal of Economic Perspectives, Volume 23, Number 1, Winter 2009, Pages 77–100.
“The Return of Depression Economics and the Crisis of 2008” P. Krugman, Penguin, 2008.
“Manias, Panics, and Crashes, A History of Financial Crises” , C. Kindleberger, Wiley 5th edition, 2005
“Slapped by the Invisible Hand” Gary Gorton, OUP 2010.
“The Regulatory Response to the Financial Crisis”, C. Goodhart, Edward Elgar 2009.
“Financial Stability Reports”, 2006-2009, found on Bank of England website, (henceforth BOE), Found at: http://www.bankofengland.co.uk/publications/fsr/
