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Unit information: Financial Crises in 2020/21

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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 Dr. Pedio
Open unit status Not open
Pre-requisites

50% in Corporate Finance (EFIM20006)

Co-requisites

None

School/department School of Accounting and Finance
Faculty Faculty of Social Sciences and Law

Description

This unit starts by describing various types of financial crisis, providing historical illustrations. It goes on to examine explanations of these crises, with particular emphasis on the asset price bubbles and busts which often precede them. The 2007 credit crisis will be analysed in depth, especially the roles of financial engineering and securitization, as exemplified by the proliferation of asset-backed securities such Collateralised Debt Obligations and credit derivatives such as Credit Default Swaps. Finally, it explores the consequences of crises and briefly examines policy issues.

Intended learning outcomes

On successful completion of this unit a student will be able to:

  1. Summarise the different types of financial crisis and discuss the main causes thereof
  2. Analyse the causes and consequences of asset price bubbles and bursts
  3. Evaluate and explain the roles of securitization and financial engineering in the crisis of 2007
  4. Provide mathematical analysis of Collateralised Debt Obligations and Credit Default Swaps

Teaching details

Teaching will be delivered through a combination of synchronous and asynchronous sessions including lectures, tutorials, drop-in sessions, discussion boards and other online learning opportunities

Assessment Details

This unit will be assessed by 100% individual coursework

Reading and References

The course will draw primarily on the following survey articles:

Claessens, S. and M.A. Kose, 2013, “Financial Crises: Explanations, Types, and Implications”, IMF Working paper WP/13/28

Scherbina, A., 2013, “Asset Price Bubbles: A Selective Survey”, IMF Working paper WP/13/45

Other articles will be discussed during the course.

For CDO and CDS pricing we will use extracts from:

McDonald, R., “Derivatives Markets”, Pearson

Hull, J., “Options, Futures and Other Derivative Securities”, Prentice Hall

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