Syllabus
Econometric principles and data
analysis
[C230]
This course examines the interaction and
confrontation between economic theory and
economic data. It is concerned with the use of
statistical and mathematical methods in
analysing economic data, with the aim of
providing economic theories with sufficient
empirical foundation to enable them to be
verified or refuted. Central attention is given
to regression analysis — the major tool of
statistical analysis in econometrics, to
hypothesis testing and the treatment of
heteroscedasticity and autocorrelation. The
MICROFIT computer package is provided for
regression analysis and diagnostic procedures.
Econometrics is concerned with quantifying
economic relations, with the provision of
numerical estimates of the parameters involved
and testing hypotheses embodied in economic
relationships. This course aims to provide a
basic introduction to econometric analysis, to
enable students to examine economic theories
with empirical data. In doing so, it examines
the difficulties inherent in confronting theory
with economic data in order to quantify economic
relationships, in dealing with errors and
problems in variables which can be only observed
but not controlled, and the means of
compensating for uncertainty in data.
Econometric principles and data analysis is
extended by Econometric analysis and
applications, which teaches more advanced
techniques in quantitative methods. This course
can be studied in its own right but normally expected to be taken as part of the MSc
or Postgraduate Diploma programme which provides
the theoretical background required to interpret
empirical data using statistical techniques.
Econometric analysis and
applications
[C232]
This is the second econometrics course that can
be taken as part of the MSc. It extends the
basic introduction to econometric analysis
developed in the core course, Econometric
principles and data analysis. This course
teaches the more advanced techniques of dummy
variables, lags and expectations, simultaneous
equation models, non-stationarity and
co-integration and forecasting. The course ends
with a brief discussion of ‘further topics for
econometrics’ for students who are particularly
keen to develop their quantitative skills beyond
the course. It assumes that students have
studied the classical linear regression model at
an introductory level and that are familiar with
the assumptions which underlie the model. It is
also assumed that they have a basic working
knowledge of the econometric software, MICROFIT.
There are many examples to illustrate the main
themes in a way which will help you in both
understanding the econometrics and putting the
theory to use with data. This course aims to
broaden knowledge and extend understanding of
econometrics. By the end of the course students
should be able to: make progress with
qualitative regressors, dummy variables and the
identification and estimation of simultaneous
econometric models; show how lags and
expectations can be incorporated in dynamic
models; and forecast with both econometric and
time series models.
Financial
econometrics (currently under development)
Financial markets and others generate vast
amounts of data on asset returns, their
volatility, and other financial variables in
long and high-frequency time series. The ability
to analyse market behaviour requires knowledge
of the properties of time series and appropriate
estimation methods. Since the early 1980s
techniques for analysing time series which
exhibit auto-regression have yielded important
studies of financial markets, increasing our
knowledge of financial variables’ volatility. In
this course you study time series techniques and
their application to financial markets. Before
starting this course students should normally
have completed the course Econometric Analysis
and Applications [C232].
Risk management: principles and
applications
[C223]
Risk management: principles and applications
examines the techniques and the foundation of
risk management in corporations. It covers the
use of derivatives, portfolio allocation, the
value of risk, and the management of credit risk
and operations risk. This course has four main
aims: to illustrate the main types of risk; to
present the most important ideas and methods
used in the analysis of portfolios of financial
securities, (including stocks and bonds); to
explain how rational investors can use financial
derivatives (mainly futures and options) in
order to alter the risk of their investment
position; and to illustrate some more
specialised risk management techniques (such as
Value at Risk and Credit Risk).
Unit 1 Introduction to risk management
Unit 2 Portfolio analysis
Unit 3 Management of bond portfolios
Unit 4 Futures markets
Unit 5 Options markets
Unit 6 Risk management with options
Unit 7 Value at risk
Unit 8 Credit risk
Derivatives
(currently under development)
The expansion of financial markets since 1973
has been founded on the growth of derivatives,
both over the counter derivative contracts and
exchange traded contracts. It was made possible
by the development of models for valuing
derivatives based upon the mathematics of
stochastic calculus. In this course you learn
the application of those principles to the
valuation of derivatives.
Modelling firms and
markets (currently under development)
You will study not only the behaviour of
individual firms, but also how firms interact
with each other in competitive and
non-competitive markets. The course will look at
models of stratgeic behaviour based on the tools
of game theory and how firms inteact under
conditions of imperfect formation. Please check
back here soon for more information about the
course. This course is currently under
development. Please check back here soon for
more information about the course.
Macroeconomic policy and
financial markets
[C225]
Macroeconomic policy and financial markets
focuses on the relationship between
macroeconomic policies and financial markets.
How do central banks’ policies on interest rates
and credit relate to financial markets? What is
the relation between budget deficits and
financial markets? How do financial markets
relate to investment and savings flows? The
course includes both theory and empirical
material.
Microeconomic
principles and policy (currently under
development)
This course is currently under development.
Please check back here soon for more information
about the course.
Corporate finance
[C221]
The theories, examples, and empirical studies in
Corporate finance which are discussed in this
course concentrate on the finance of
corporations whose shares are traded on a well
organised stock market. The purpose of the
course is to explain the observable financial
decisions of corporations and portfolio
managers, and to interpret the behaviour of the
securities markets which results from the
decisions of those and other agents.
Traditionally, the securities markets considered
in corporate finance are ‘spot’ or ‘cash’ stock
markets dealing in company shares and bonds. But
modern finance also includes large and growing
markets in ‘derivatives’, especially options and
futures, which are contracts relating to the
future prices of the underlying shares or bonds.
To ‘explain the behaviour’ of any of the
financial markets involves explaining how the
prices of shares, bonds and derivatives are
determined. The course aims to enable students
to understand and analyse the theoretical
principles relating to corporate finance, and
the controversies and criticisms which surround
these theoretical propositions. It focuses on
the relation between corporations’ decisions on
investing in productive (‘physical’) assets and
issuing financial liabilities, and the markets
in the financial liabilities (equities and debt)
which they issue. The theorems concerned with
corporations’ decision problems which the course
examines include the Net Present Value Rule, the
Modigliani-Miller Theorem on Dividend Policy and
their earlier seminal Theorem on Debt-Equity
Ratios, and Agency Theory; and the main theorems
focusing on the Operation of Financial Markets
analysed are the Efficient Markets Hypothesis,
the Capital Asset Pricing Model, and the Theory
of Option Pricing.
Corporate governance
[C244]
This course analyses legal/political/economic
features of major corporate governance systems,
examining how corporate governance systems
influence the performance of individual firms
and the allocation of capital within a country.
It investigates the evolution of diverse
ownership and governance structures across
different economies.
Unit 1 Definitions of corporations and
corporate governance
Unit 2 Theory of the firm
Unit 3 Corporate governance and the role of
law and the state
Unit 4 Corporate governance systems:
equity-led, bank-led and family-led
Unit 5 Control and board composition
Unit 6 Control and CEO compensation
Unit 7 International corporate governance
Unit 8 Corporate governance guidelines and
codes of best practice in developed, developing
and transition economies
International finance
[C229]
This course is concerned with the institutions
of international finance and the key policy
problems that have arisen in recent decades. It
presents a policy-oriented perspective, similar
to that an economist would use when advising
governments on how to work within the modern
international financial system and how to
overcome its problems. The course aims to
familiarise students with the three key concepts
necessary for understanding the problems of
policy formulation within the international
financial system: the institutional structure of
the modern international financial system; the
principles of financial policy analysis for an
open economy; and the principles affecting some
current policy issues in international finance.
The International Monetary Fund
and economic policy
[C213]
By the time you have completed your study of
this course, you will be in a position to
understand the role, function and operations of
the IMF, its approach to stabilisation, and the
major criticisms and controversies that its
approach has elicited. You will also be able to
identify the influence of the financial sector
in precipitating instability, and you will have
a strong appreciation of the particular
circumstances of low-income countries seeking to
stabilise their economies.
Public financial management:
planning and performance
[C201]
In this course you will be introduced to the
methods and issues of public financial
management. You will examine subjects including
cost management, budgeting, expenditure control
techniques, accounting for public spending and
performance budgeting.
Public financial management:
revenue
[C205]
In this course you will study the theory and
practice of public finance with special
reference to how governments raise revenues and
how they use taxation to pursue policy aims. The
course is mainly concerned with taxation,
borrowing and aid.
Project appraisal and impact
analysis
[C207]
This course will give you a theoretical and
applied background to investment finance. You
will study the project cycle from project
identification to project and programme
appraisal techniques, and including financial
and economic analysis, impact assessment and
risk analysis.
Finance in the global market
[C242]
Financing the global firm: multinational cost of
capital and capital structure; sourcing debt and
equity globally. Measuring and managing foreign
exchange exposure. Foreign investment decisions.
Corporate strategy and foreign direct
investment. Foreign ventures. International
portfolio investment. Multinational capital
budgeting. International acquisitions and
valuation. Country risk analysis. Multinational
taxation. Legal aspects of foreign direct
investment and multinational corporations.
Bank regulation
and resolution in banking crises (currently
under development)
Bank crises occur frequently in many countries
and across many time periods. Many go beyond the
distress of individual banks and have systemic
effects, threatening the banking system as a
whole. Since the nineteenth century governments
and central banks have developed increasingly
sophisticated methods to regulate banks in order
to minimize the risk of bank distress and
intervention tools to mitigate its effect. Since
crises recur, as in the USA and United Kingdom
in 2007, they motivate heightened discussion of
the merits of regulation and intervention and
their design. In this course you study technical
aspects of bank regulation, supervision, and
intervention to resolve crises. It relates the
techniques to fundamental principles and to
examples of countries' experience.
Bank financial
management [C222]
This course has a somewhat more practical
orientation than many other courses in the MSc
programme, focusing as it does on the
microeconomic problems of financial management
of banking firms. This does not mean, however,
that the course is devoid of theoretical
interest. It also raises some new theoretical
problems for consideration, many of them
concerned with the way we need to conceptualise
the banking firm. This course examines the role
and importance of bank financial management to
the modern bank. It teaches the basic models of
financial management taught by University
Economics Departments and Business Schools,
which were constructed from the experience of
mature capitalist economies. The course
discusses the various trends shaping banking
markets, such as institutionalisation,
securitisation, globalisation and concentration.
Among its aims are the following: to set the
banking firm in the context of a changing
financial services industry; to look at the role
of the financial manager within the banking
firm; to examine bank capital and capital
structure, and to consider the question of the
adequate regulation of the banking sector to
ensure its safety, to preserve bank liquidity
and prevent bank failures.
Banking and capital markets
[C226]
This course covers the role of banking and
finance in the economy. It introduces some of
the central issues and ideas in modern theories
of banking and finance in the light of recent
thinking about the relationship between banking,
finance and the real economy. In this course,
finance is examined within a general framework
concentrating on the experience of advanced
capitalist economies, including an introduction
to the current concern with derivatives. As a
contrast, applications to less developed
economies are also, briefly, considered. The
course is organised around four principal
themes: the relationship between financial
markets, financial institutions, and the
economy’s real investment and savings; the
trade-off between risk and expected returns and
their links to information and monitoring; the
efficiency of financial markets; and the
dialectic between regulation and deregulation or
liberalisation of financial markets.
Quantitative methods for
financial management
[C219]
This course introduces some of the quantitative
methods of financial management which are
commonly used by financial analysts, firms’
managers and individual investors. It examines
techniques for the valuation of different
classes of securities, analyses criteria for
guiding investment decisions, considers the
measurement of asset risk and return and
discusses statistical techniques of forecasting.
The MICROFIT computer package is provided for
regression analysis and diagnostic procedures.
The aim of the course is to give students
confidence and skill in the use of the
mathematical and statistical methods used in the
analysis of financial instruments and financial
markets, including the calculation of financial
market yields and prices, frequency
distributions, risk and probability, correlation
and regression analysis. Statistical inference,
the multiple linear regression model,
autocorrelation, and risk reassessment and
investment are all topics covered in the course,
which teaches not only the relevant theoretical
concepts but, in the belief that quantitative
techniques can only be learned by doing, gives
abundant practice in the manipulation of
numerical material with problems and exercises.
Research methods
[C253]
The purpose of the course is to provide students
with a thorough understanding of the theoretical
concepts, methodological approaches and
reporting issues that underpin good quality
research projects. It is a prerequisite course
for completing a dissertation. The course
outlines the issues involved in planning,
designing, executing and reporting research. In
addition it provides students with the
opportunity to develop quantitative and
qualitative skills, depending on the
dissertation topic and research interests.
Dissertation
[C254]
The Research methods course covers the
methodological basis for the final dissertation.
It includes methods for setting up and carrying
out research on issues in development finance
and related areas. The topic for the
dissertation to be submitted by MSc students
must be approved by the Programme Director and
is expected to relate to both theory and policy
issues.
