In your first term from October to December, you will take the following core modules.

  • Principles of Financial Intermediation

    This module familiarises students with ten fundamental questions in financial intermediation to conceptualise the role of banks for the economy and understand how bankborrower relationships and regulation affect bank performance using research papers. The objective of this module is to equip students with the skills to deploy econometric techniques in the context of research questions applied to the banking industry. This module assumes that students comprehend the foundations of corporate finance, monetary policy, and applied econometrics.

  • Foundations of Financial Markets

    This module will initially introduce students to core concepts in finance like time value of money, net present value analysis and alternative investment rules to assess investment decisions taken by firms and then moves on to the introduction of basic concepts related to financial markets, including definitions of key assets and market types as well as an understanding of the economics of financial markets with a focus on their functions, participants and organisational forms.

    This module will then provide students with a good understanding of fundamental theories and techniques in finance that are of concern to all financial market participants, such as bond markets and term structure of interest rates, economics of derivatives markets, forward and future contracts, swap agreements. The module will place a particular emphasis on understanding how quantitative methods and techniques are used in financial markets.

  • Macroeconomics for Money, Banking and Finance

    Upon completion of this module students should be able to understand (a) the basis of the modern consensus approach (micro foundations) to macroeconomic analysis, (b) the foundations of modern monetary policy theory and the role of central banks in periods of financial crisis, and (c) the basis for financial regulation (Basel Accords) and the role of macroprudential policies. At a more hands-on level students will gain understanding and skills in the methods of programming and manipulating a macroeconomic model, as well as interpreting the associated output.

  • Applied Econometrics

    The purpose of this 15-credit module is to provide students with an introduction to (1) multiple regression techniques using Ordinary Least Squares (OLS) estimation and (2) the principal microeconometric techniques used for analysing cross-sectional and panel data, with emphasis placed on those techniques that are instrumental in the rigorous analysis of banking data.

  • Topics in Banking Regulation and Financial Stability

    This module introduces students to key concepts in banking regulation and supervision so as to enable them to understand the effects of changes in regulation and supervision for banks’ business activities and, ultimately, the real economy. The module draws extensively on publications by central banks and regulators. The objective of this module is to equip students with the skills to comprehend and analyze sources of instabilities in the financial system and evaluate their effect on other agents in the financial system.

During your second term from January to March, you will take the three core modules below.

  • Microeconomics for Money, Banking and Finance

    This module introduces students to those aspects of microeconomics upon which the modern understanding of financial markets, asset-price determination, and financial intermediation is built.

  • International Money and Banking

    The first four sessions aim to establish an understanding of banks’ behaviour and balance sheets, including capital structure, lending decisions and attitudes to risk. These sessions also study the banks’ role in transmitting the monetary policy decisions of the central bank, i.e. the choice of official interest rates and ‘quantitative easing’. This enables a discussion of the effects of monetary and fiscal policy on the main macroeconomic variables. Session four looks at the origins of the financial crisis and the policy responses.

    Sessions five to seven cover developments in international banking regulation before and since the crisis. This includes the regulation of capital and liquidity under the Basel accords, the attempts to address the moral hazard and the ‘too-large-to fail’ problems, and the influence of regulation on the shadow banking industry.

    The final three sessions study banking and monetary policy in the international context, with a particular focus on problems in the Eurozone and the operation of the eurosystem of central banks.

    In this course, the treatment will generally be non-technical and will be based on developing an understanding of institutional practices and their implications.

  • Market Risk Forecasting and Control

    The aim of the module is to provide students with the hands-on time-series skills to competently estimate, test and interpret market-risk forecasting and control models & techniques which are required in the current regulatory environment: Value-at-Risk, Expected Shortfall, backtesting, extreme-value distributions, and copula models.

You will also take a further two modules from the optional modules below.

  • Advanced Corporate Finance

    This module builds on and extends the concepts covered in the core financial management module in the first term. The major topics covered include capital budgeting, capital structure, corporate valuation, corporate restructuring, merger and acquisitions, dividend policies, and application of real options in corporate finance. The analytical tools and financial theories discussed in the module are brought together through in an assessed report for which you work in groups to undertake comprehensive corporate finance analyses on a real company.

    In lectures we will use cases based on real companies to demonstrate the links between the various areas of corporate finance. A key objective of the module is to help you explore how the financing and investment policies of firms interact with each other and how the decisions have implications for corporate valuation.

    This module contributes to the following CFA syllabus areas:

    • Corporate Finance (CFA levels I and II)

  • Risk Management in Commercial Banking

    This module examines how banking institutions generate earnings and the nature of risks assumed in their operations, and gives you the conceptual framework needed to analyse and comprehend the current problems confronting managers of commercial banks and other financial intermediaries. It is assumed that you already have a good understanding of the basic theoretical concepts of corporate finance, monetary theory and financial accounting.

    After briefly revisiting the question of why financial intermediaries exist and the distinctive roles of depository institutions relative to non-depository institutions, we move to the main focus of the module: explaining the various types of risk that financial intermediaries are exposed to as well as the ways that they measure and manage risk. This includes an analysis of interest rate risk, credit risk (individual loan risk and portfolio risk), off-balance sheet risk, and liquidity risk. The risk management component includes liquid asset management and liability management, product and geographic diversification, and the use of loan sales and derivatives.

    Other important aspects include prudential bank regulation such as minimum capital requirements (i.e., Basel I, II, and III), countercyclical loan loss provisions, deposit insurance and other explicit or implicit guarantees. All topics are discussed in relation to the recent financial crisis.

  • International Money and Finance

    Beginning with the basic international parity relationships, this module examines the nature of business exposure to foreign exchange risk and the techniques available for hedging these risks. In addition to reviewing forward and futures contracts, several sessions are devoted to the theory and application of options contracts in the context of forex risk hedging.

  • Behavioural Finance

    This module looks at what can happen to the asset pricing in situations where market imperfections coincide with imperfections in investor rationality. It therefore explores the boundary between mispricing which can be exploited and that which cannot be exploited profitably.

    The module lays foundations for arbitrage, investment and wealth management, investment banking, and corporate finance. The material covered is at the frontier of academic and industry research, forming a conceptually advanced body of knowledge (CFA level III) which is of relevance for theory, research and practice.

    Topics covered include:

    • The efficient markets hypothesis and competing theories

    • Limits to arbitrage

    • Heuristics, biases and prospect theory: mental accounts and evidence in market prices

    • Myopic loss aversion, disposition effect and overtrading

    • Professional investors and analysts: over- and under-reaction

    • Bubbles: observational and experimental, rational and non-rational

    • Closed-end fund discounts, co-movement and sentiment

    • The equity premium puzzle and the volatility puzzle

    • Herding

    • Behavioural portfolio theory

From May to July you work solely on your Masters dissertation, with support from your dissertation supervisor. You will submit it at the start of September, at the end of your Masters programme.

  • Dissertation

    The final element of the MSc is the dissertation, a substantial piece of independent work conducted over the summer months through to September. The dissertation gives you the opportunity to apply research techniques and relevant economic theory to a research topic.