Minor Money and Banking
- Broadening minor
- Minor code
- 10 weeks
The goal of this minor is to provide students with the key concepts that are critical to understanding how the financial system, the banking system, the money supply process and monetary policy work. Some of the questions addressed in this course are:
- What is money and how is it created in the financial system?
- How do capital and money markets work?
- How are interest rates on different bonds determined?
- What is the role of commercial banks and central banks?
- Why and how are banks regulated?
- Why can financial crises have such devastating consequences for the real economy?
- How do central banks implement conventional and unconventional monetary policy?
- How does monetary policy transmit to the real economy?
A special emphasis will be put on recent developments. For example,
- What are the pros and cons of very low interest rates for the banking system and the economy as a whole?
- How do unconventional measures such as quantitative easing work?
- Can cryptocurrencies such as Bitcoin or Libra take over the role of traditional fiat money?
Following this minor, students are able to:
- Describe the functions of the financial system
- Explain the role of banks and other financial intermediaries
- Debate the functions of money and safe assets
- Define and calculate present value, yield to maturity and expected return
- Analyze theories of the risk- and term-structure of interest rates
- Explain rational expectations, behavioral biases and the efficient market hypothesis
- Distinguish moral hazard and adverse selection problems in financial markets, and describe how they can be overcome by financial intermediaries
- Explain the inherent instability of banking, and discuss how it is addressed by financial regulation
- Compare triggers and the evolution of financial crises throughout history
- Analyze different models of financial crises
- Explain the money supply process, and the role commercial and central banks play in it
- Describe how central banks implement conventional and unconventional monetary policy
- Discuss how monetary policy is transmitted to the real economy
It is a major goal of this minor to make the theory and discussion directly applicable to the real world – every class will strive to show students, how the material covered in each session is directly relevant to them.
This course is aimed towards a wide population of students from a multitude of backgrounds.
The required skills for the course are:
- Basic skills in math and statistics
- Good knowledge of English
- Basic knowledge of corporate finance (appreciated but not necessary)
- Basic knowledge of macroeconomics (appreciated but not necessary)
All RSM minors have mandatory attendance.
Overview content per week
Week 1: The financial system and the economy
Week 2: Money and interest
Week 3: The risk- and term-structure of interest rates
Week 4: The stock market
Week 5: How banks work
Week 6: Bank fragility and financial regulation
Week 7: Financial crises
Week 8: Monetary policy implementation
Week 9: Monetary policy transmission
The course consists of interactive lectures which students need to prepare for by studying teaching materials. There are two group assignments which students present in class. Students also need to participate in a game about financial regulation.
- "The Economics of Money, Banking, and Financial Markets, 12th Global Edition” by Frederic S. Mishkin (ISBN 9781292268859)
- Selected scientific articles
Method of examination
- Final written test (open questions)
- Two written team assignments and presentations
- Participation in financial regulation game.
Composition of final grade
Final Grade = 0.3 × (Averaged Assignment Grade) + 0.7 × (Written test Grade)
The minimum passing grade for the written test is 4.5, and the minimum overall grade is 5.5. There is no minimum number of points required for the assignments. Failure to participate in the game reduces the overall assignment grade by 1 grade point.
There will only be a re-sit for the written test.
In class feedback, office hours, and written feedback on assignments.
+31 10 4082748
room: T8-46 (Mandeville)
- Broadening minor
- Minor code
- 10 weeks
- Rotterdam School of Management, Erasmus University
- Study points (ECTS)
- Instruction language
- Campus Woudestein, Rotterdam