EC4024 Financial Economics 2015

This is the course page for EC4024, Financial Economics, Spring 2015.


Module outline

Data Project Guidelines, Dataset (xlsx format). Turintin Details 


1. Introduction to the module. (updated, .pdf)

What is the purpose of finance? Basics of valuation, how investors value firms, how firms take decisions to invest. An example from real estate finance.

2. How to read a balance sheet, what equity is, and isn’t, how leverage works. The role of leverage in the collapse of the Irish economy.

3. What is money? How it is made? Where does it come from? Quantitative easing in the modern economy.

4. Contract theory and monitoring. Finance, convenants and ‘the law’. Burning bondholders and all that: why Parri Passu matters more than you do.

5. How Lombard Street works, theory of the dealer, and your very first real supply and demand curves. Stigum’s Money Markets, the economics of the dealer function.

6. Bond Markets: not all they are cracked up to be. Pricing, allocation and provenance of bonds. Bond markets and FX markets.

  • K. Pilbeam, Finance and Financial Markets, 3rd Ed, Palgrave, 2009, chapter 6.
  • Stigma's Money Markets, chapter2, 1, 2, and 3 (up to Duration and Convexity).

7. Zombie theories of finance. CAPM, APT, EMH. Acronyms you need to know and distrust deeply.

8. Finance, Innovation and Growth 1: Basics

9. Finance, Innovation and Growth 2: Refinements

10. Algorithmic Trading

  • Arnuk, Sal and Joseph Saluzzi (2012), Broken Markets, Chapters 2 and 10.
  • Tarun Chordia, Amit Goyal, Bruce N. Lehmann, Gideon Saar (2013) High-frequency trading, Journal of Financial Markets 16(4).

11. Finance, Economics, and Bitcoin: Don't believe the hype.

12. Review.


Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Week 11

Exam Preparation

Sample Exam


Supplementary Texts: There is no textbook for this module, but a few books might aid students.

  1. Keith Pilbeam, Finance and Financial Markets, Second Edition, Palgrave, 2005.
  2. Frank Fabozzi et al, Financial Economics, Wiley, 2012
  3. Perry Mehrling, The New Lombard Street, Princeton, 2010.
  4. Ryan Collins et al, Where does Money come from? New Economic Foundation, 2012
  5. Marcia Stigum, Stigum’s Money Market, 4th
  6. Anat Adamati and Martin Hellwig The Banker’s New Clothes: What’s wrong with Banking and What to do about it. Princeton, 2014.
  7. Deirdre McCloskey, Economical Writing, Waveland Press, 1999.