Policies Global Financial Markets, Institutions & Course ...

Global Financial Markets, Institutions & Policies

Course Outline

Fontys School of Marketing & ManagementInternational Business & Management Studies

© Ewoud JansenSeptember 2017

Contents

- Introduction- Intended Audience & Prerequisites- Modules in Brief- Assessment Framework

Appendix1.Essay Requirements2.Module Descriptions

Minor Global Financial Markets, Institutions & Policies

Introduction

Economies around the world are ever more connected. Linking them is an increasingly sophisticated and complex network of (financial) markets and institutions and regulators such as Central Banks, the International Monetary Fund and the Securities and Exchange Committee . The decisions made by these institutions affect the markets that are vital for international companies to conduct business. A prime example is the foreign exchange market that is of great importance to companies trading with customers/suppliers in countries with different currencies. While exchange rates are of course driven by the common economic forces of supply and demand, these forces are influenced by interest rate and other monetary decisions of Central Banks. For their funding, companies rely on different capital markets, not only domestic but also foreign thus having access to a broad pool of funding and investors.In turn, the capital markets also have an important signaling function to management by way of the price movements of the shares and securities their companies have issued.

Understanding the dynamics of these markets and the regulatory framework behind it is of key importance for anyone who wishes to pursue a career in international business. Besides that, it is an area that is fascinating to study in its own right.

This minor aims to offer students a thorough grounding in the dynamics of the markets and institutions that influence and shape the international business arena. Also the role of the national government(s), central banks and other regulation bodies and their influence on the economy is studied.

When dealing with subjects in the fields of economics and finance, a certain exposure to (theoretical) models is unavoidable. They are important in helping understand the dynamics and forces that drive markets and the economy and to think about them in a structured manner. In this minor however, the mathematical complexity is kept at a minimal level. Besides core theory and some textbooks, in all modules articles from journals and newspapers such as the Economist, the Financial Times, Wall Street Journal and similar publications will be required reading. This will benefit students directly as the real world is brought and discussed in the classroom. It also means that besides some core theory and knowledge, the exact content of each module and the lectures will also depend on the (recent) current affairs as they unfold.

Intended Audience & Prerequisites

The minor is intended for students who have successfully completed their first two years in a bachelor program. Basic undergraduate course(s) in Financial Accounting and Macro Economics must have been part of their prior studies.

Modules in Brief

The minor consists of six modules. Five of them focus on a core area of interest such as the banking system or international stock – and bond markets. The sixth module consists of a research assignment that students carry out in pairs.

For a more elaborate description of the modules including lecture planning, please refer to the appendix.In short, the content of the modules is:

1.International Capital Markets-The role of capital markets in the economy-Bond markets-Equity markets-Derivatives markets-Efficient markets versus behavioural finance-Valuation of securities-Portfolio strategies

2.Foreign Exchange Markets, Currency Risks and Hedging Strategies-Macro economic context-Understanding FX quotes-Spot rates / Forward rates -(Triangular) Arbitrage-Interbank Market-Hedging & Speculation

3.International Macro Economics-Theory of comparative advantages (Ricardo)-Understanding trade balances and current accounts-International capital flows-Supply side versus demand side stimulus ‘to Keynes or not to Keynes?’-Foreign direct investment-The international institutional arena (IMF, Worldbank etc..)-Discussing World Economic Outlook (IMF)

4.Monetary Economics and Banking-The History of Money-The role of central banks and their tool kit-Money Creation and Credit-Money supply, Inflation, deflation -Banking regulation (Basel III etc..) -Alternatives like Bitcoin

5.International Financial Reporting & Stakeholder Management-International Financial Reporting Standards (IFRS)-US Generally Accepted Accounting Principles (USGAAP)-Accounting & Ethics -Stakeholder Management & Sustainability

6.Paper and Research assignment

In this module, students carry out a research project on something related to one (or more) of the other modules. In the A module students write a research proposal. During the A period, the lectures will focus on generating ideas for research and writing a research proposal. Also some key financial math techniques will also be discussed. In the B module the research is carried out resulting in a paper. Lectures will then serve as consultancy hours for the students to get feedback on their work.

Research

In general research aims to answer questions with the help of information or data that has been specifically collected for that purpose. The most important trait of a good researcher is curiosity, in other words have a great desire to know something. In this minor, the research can relate to anything that concerns one of the other modules:

Some examples are:

Determining whether the Return on Equity of companies is affected by different accounting standards.

A comparison of the performance of the US - and Japanese stock markets during the last decade.

Establishing the correlation between GDP per capita and government debt levels.

Of course the possibilities are endless. To get started and narrow down the possibilities it is best to start looking for topics that you find the most interesting. Furthermore, keep things practical. Do not select a research topic where it will be very hard to collect information. It has to be ‘doable’.

This module is separated into two parts. During the first period, students select a research topic and write their research proposal. In the second period the research is actually carried out and the results and conclusions are written down in a paper.

Research Proposal

Starting a research project without a clear plan is like starting to build a house without having any idea how big it will be and what design it will have. The purpose of the research proposal is to get a clear picture of exactly what the research aims to achieve and how this will be done. Of key importance is to realize what kind of data are needed so that they can be collected in a structured organized manner. Without such a plan researchers may collect all kinds of data without having any idea whether they are relevant or not.

The research proposal must include the following aspects:

Description of research topic and research questionsResearch topic and main research question(s).

Literature ReviewDiscussion of at least 10 relevant articles on this topic.

Data Collection Methods and Research DesignExplanation of what data and information will be collected and how and where. Whatever the topic, numerical data must always be part of the data mix.

Analytical FrameworkExplanation of how the data will be used or combined in order to answer the main research question(s).

Research Paper

The research paper itself will include the entire proposal. Obviously, while actually carrying out the research it is possible that the research method or data collection procedure have to be adjusted due to (unforeseen) circumstances. In that case of course the adjusted version must be included in the paper.

Following that, the paper will present the data that have been collected and other research findings and finally the conclusions and answers to the research questions will be presented.

As an indication, the proposal will be around 10 pages. The full paper itself will be around 30 pages long. For both the proposal and the paper the standard reporting requirements apply.

Assessment Framework

1.International Capital Markets (4 credits)-Course Work Assignments assignments A period: 50%-Written Exam end of B period: 50%

2.Foreign Exchange Markets, Currency Risks and Hedging (4 credits)-Exam end of A period: 50%-Course work end of B period: 50%

3.International Macro Economics (4 credits)-Individual essay: 100%

4.Monetary Economics and Banking (4 credits)-In class participation 20% and Written Exam end of A period 30%-In class participation 20% and Written Exam end of B period 30%

5.International Financial Reporting & Ethics (4 credits)-In class participation: 40%-Individual essay: 60%

6.Paper and Research assignment (10 credits)-Research Proposal end of A period: 50%-Research paper end of B period: 50%

Appendix 1. Essay Requirements

In some modules, individual essays have to be written as part of the assessment mix. In the essay you will formulate and write down your own opinion on a certain theme relevant to the module at hand.

Of course topics will vary depending on the contents(s) of the module but all essays must show the following structure.

-Title Page-Introduction-Main text and analysis-Conclusions-Bibliography

In the introduction the scene is set. You mention what you will discuss and why it is relevant. The main text shows the discussion and analysis of the issue. References to opinions, ideas and facts from other publications such as newspapers, statistical publications etc must be included in this part. Finally you formulate and summarize your own opinion and take on the situation.

Writing an essay is not about being right or wrong. In the essay you show that using other publications and data, you can analyze a certain economic issue and formulate a coherent opinion about it. That’s is what will be taken into account when teachers grade it.

Some ideas for essay are:-The introduction of the euro was a good (stupid) idea-Robots will cause a permanent increase in unemployment-Permanent economic growth is not sustainable from an environmental point of view-The focus of management on creating stockholdervalue is morally (un)ethical

As a general rule of thumb use the following

A 2 ECTS essay will be 1,500 words.A 4 ECTS essay will be 3,000 words

2. Module Descriptions

Academic year: 2017 - 2018

Educational program: International Business and Management Studies

Block number and names + Code:

International Capital Markets

Position in curriculum: Minor Finance & Economics

Total number of credits: 4

Teacher(s): Ewoud Jansen

Learning outcome(s): After this module students will have knowledge about the dynamics and functions of (international) capital markets and the main financial titles traded on those markets.

Content per lecture: Module ALecture 1-The role of capital markets in the economy-Types of securitiesLecture 2-Equity markets -Stock Issues & -Share buy backs-List or not to List-Venture Capital & Private EquityLecture 3-Market Value vs Bookvalue-Efficient Markets versus Behavioral Finance-Investment Strategies & Portfolio ManagementLecture 4-Equity Markets, Measuring PerformanceLecture 5-Debt & Plain Vanilla Bond Markets-Valuation of bondsLecture 6-Debt, Special Features Module BLecture 7-The Dimensions of Risk-Cost of Capital-Miller & ModiglianiLecture 8-Capital Asset Pricing ModelLecture 9-Derivatives Markets-Forward ContractsLecture 10-Options, the basicsLecture 11-Options, Valuation and Strategies Lecture 12-Synopsis

Teaching method(s): Discussion of concepts using examples and case studies

Literature: Guide To Financial Markets (the Economist). Articles and documents posted on the portal. Everything discussed in the lectures.

Assessment: Course Work Assignments in period A. Written exam after period B. Please note that also contents of A module can and will be part of this written exam.




Foreign Exchange Markets (FOREX)

Position in curriculum: Minor: Global Financial Markets, Institutions & Policies

Total number of credits: 4 ECTS

Teacher(s): Anthony Murphy

Learning outcome(s): Students completing this Course should have an understanding and knowledge of the following areas related to FOREX:• What is FOREX?• The macro-economic context of FOREX• The political economy of FOREX• The Concept of Risk• Currencies• Hedging & Speculation in FOREX• Trading methods and strategies

Content per lecture: Module A: The Context Lecture 1: Introduction to FOREX Lecture 2: Currencies Lecture 3: Macro-Economic Context 1 Lecture 4: Macro-Economic Context 2 Lecture 5: The Concept of Risk Lecture 6: Summary and Exam Preparation

Module B: Trading FOREX Lecture 7: The Interbank Market & Derivatives Lecture 8: Hedging and Speculation Lecture 9: Trading Methods & Strategies Lecture 10: Class Tasks Lecture 11: Class Tasks Lecture 12: Summary and Coursework Review

Teaching method(s): One lecture a week (100 minutes). Introduction to the topic followed by working on assignments and cases.

Literature: Core Text: Foreign Exchange: The Complete Deal: A Comprehensive Guide to the Theory and Practice of the Forex Market - James Sharpe - Harriman House Ltd (Feb. 2012)Readers distributed in class/department portal

Assessment: Exam with 4 Open Questions in Module A = 2ectsCoursework for Module B (Case Study or Essay of 1500 words) = 2ectsBoth assessments need to attain a grade of 5.5 or higher.

http://www.amazon.co.uk/s/ref=dp_byline_sr_book_1?ie=UTF8&field-author=James+Sharpe&search-alias=books-uk&text=James+Sharpe&sort=relevancerank




International Macro Economics


Total number of credits:

4

Teacher(s): You Wang

Learning outcome(s): After this module students will have in-depth knowledge of international economics, international trade.

Content per lecture: Lecture 1Labour productivity, comparative advantage and income distributionLecture 2Seminar: topic of Labour productivity, comparative advantage and income distributionLecture 3The instrument of trade policyLecture 4Seminar: topic of comparative advantage and trade policyLecture 5National income accounting and the balance of paymentsLecture 6Exchange rates and the foreign exchange marketLecture 7Money, interest rates and exchange ratesLecture 8Fixed exchange rates and foreign exchange interventionLecture 9Seminar: topic of exchange rateLecture 10Seminar: topic of foreign exchange interventionLecture 11Optimum currency areas and the euroLecture 12Seminar: topic of euro and euro zone

Teaching method(s): Discussion of concepts using examples and current affair situations and developments

Literature: International economics: Krugman, Obstfeld and Melitz, Relevant articles from the Economist, Financial Times and other publications.

Assessment: Essay on current affairs issue after period A (50%)Essay on varying topics after period B (50%)




Monetary Economics & Banking



4

Teacher(s): You Wang

Learning outcome(s): After this module students will have in-depth knowledge of monetary economics and banking system

Content per lecture: Lecture 1An Overview of the Financial SystemWhat Is MoneyLecture 2Understanding Interest RatesThe Behavior of Interest RatesLecture 3Seminar: topic of money and interest rateLecture 4Central bankLecture 5Seminar: topic of central bankLecture 6Monetary PolicyLecture 7 seminar: topic of monetary policesLecture 8Banking Industry: Structure and CompetitionLecture 9Seminar: banking systemLecture 10Quantity Theory, Inflation, and the Demand for MoneyLecture 11Monetary policy in the European unionLecture 12Seminar: Monetary policy in the European union

Teaching method(s): Discussion of concepts using examples and current affair situations and developments

Literature: Monetary economics: Bain, Howells. Economics of Money, Banking and Financial Markets, The, Business School Edition, Mishkin.

Assessment: -Exam A 60% -individual Coursework A 40% -Exam B 60% -individual Coursework B 40%




Accounting Ethics & the Development of International Financing Standards

Position in curriculum: Minor

Total number of credits: 4 ECTS

Teacher(s): Mariëtte Mambwe

Learning outcome(s): • The ability to explain the development of international financing standards• The ability to examine financial statements • The ability to describe different financing standards• The ability to compare different financing standards (IFRS, GAAP etc.)• The ability to explain the need for international financing standards• The ability to use forensic accounting• The ability to defend a well-supported opinion about ethical behaviour in

Finance & AccountingContent per lecture: Module A

Lecture 1: Introduction to accounting ethics and the history of International Financing Standards

Lecture2: Forensic accounting Lecture 3: The challenges of ethical behaviour Lecture 4: IFRS Lecture 5: AAOFI Lecture 6: Islamic Banking & Finance products

Module B Lecture 7: Essay discussion Lecture 8: GAAP Lecture 9: GAAP Lecture 10: GAAP Lecture 11: Comparing standards Lecture 12: The future of International Financing Standards

Teaching method(s): One lecture per week (100 minutes). Introduction to the topic followed by discussion of (fraud) cases. The students have to actively participate and have to prepare and present at least one case study.

Literature: Online syllabusAssessment: In class assignments (40%) and Essay (60%). Both elements need to be

scored with a 5.5 or higher.




Research and Paper A


Number of credits: 5

Teacher(s): MSc Belinda Salcedo Knicknie

Learning outcome(s): Gaining knowledge on financial theories, concepts and issues of causality in order to start with the research process.

Recognise a financial event and its concise and precise research problem.

Devise and present a sound and valid research proposal for a causal research.

Execute data collection of a research. Apply statistical concepts and perform statistical computation as

part of a causal research. Present preliminary research results of a research Create a sound research proposal

Content per lecture: Lesson 1: Introduction on Financial Research Lesson 2: Financial concepts, theories and issues of causality part ILesson 3: Financial concepts, theories and issues of causality part IILesson 4: Regression Analysis part ILesson 5: Regression Analysis part IILesson 6-12 Presentations

Teaching method(s): The course consists of five lessons and seven presentation sessions. The first lesson is an introductory lesson and lesson two and three are concerned with providing basic knowledge on financial theories, concepts and issues of causality. Students have to present a chosen academic article and provide guidance on how the concepts and theories of the study can be applied and executed in reality. The lessons and presentation sessions are compulsory and students are expected to come fully prepared and participate actively in all discussions. In addition, students work on a research proposal in a team of two students. The coach will give feedback on and grade the research proposal and presentation.

Literature: Students must find the best literature for themselves to gain the required knowledge and understanding on the topic covered.

Assessment: PresentationA presentation of a chosen academic article where the applied financial concept(s) and methodology will be explained.

Research proposalA written proposal of the execution and results of a chosen problem statement.

You pass the Finance Research course if your final grade is 5.5 or higher. If your final grade for the Finance Research course is below 5.5, you have to retake the research proposal. You can retake the research proposal after registering.

Deadline The deadline for the research proposal is 19 October 2016 in hardcopy in my pigeon hole and in softcopy via Ephorus (code is my email address) before 13:15hrs.




Research and Paper B



5

Teacher(s): Belinda Salcedo Knicknie

Learning outcome(s): Understand financial events and its research problem. Devise and present a sound and valid causal research report. Execute data collection of a research. Apply statistical concepts and perform statistical computation as

part of a causal research. Present results in a research report. Discuss and conclude the obtained results from the research

execution.

Content per lecture: Lesson 1: Introduction on the research reportCoaching on:Lesson 2: Literature reviewLesson 3: Data collectionLesson 4: Data analysisLesson 5: Validity and reliabilityLesson 6: Discussion and conclusions

Teaching method(s): The course consists of one introductory lesson and 5 coaching sessions (one coaching session per week). Each coaching session provides guidance on how the concepts and theories of the chosen problem statement can be applied and executed in reality. The introductory lesson and coaching sessions are compulsory and students are expected to come fully prepared and participate actively in all discussions. Students work on the research in a team of two. The coach will give feedback on and grade the research.

Literature: Students must find the best literature for themselves to gain the required knowledge and understanding on the topic covered.

Assessment: Research A written research report of the execution and results of a chosen problem statement.

You pass the Finance Research course if your final grade is 5.5 or higher. If your final grade for the Finance Research course is below 5.5, you have to retake the research report. You can retake the research report after registering.

Deadline 24 January 2017 in hardcopy in my pigeon hole and in softcopy via Ephorus (code is my email address) before 13:15hrs.

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