Lecture 6: Financial Markets and Economic Stability

Business & Economics - 14 slides

Lecture 6 explores the intricate relationship between financial markets and the economy, focusing on the emergence of financial crises and the pivotal role of regulatory frameworks in maintaining stability. Key topics include the structure of banking systems, the functions of stock markets, and the

Topics Covered

  • Introduction to Financial Markets and the Economy
  • Structure of Banking Systems
  • Stock Markets: Mechanisms and Economic Role
  • Financial Crises: Causes and Dynamics
  • Role of Central Banks in Crisis Management
  • Regulatory Frameworks for Financial Stability
  • Credit Cycles and Economic Impacts
  • Systemic Risk in Financial Markets
  • Shadow Banking System Impact
  • Interconnectedness of Financial Markets and the Global Economy
  • Contagion Effects in Financial Crises
  • The Role of International Financial Institutions
  • Technological Innovations and Financial Market Disruption
  • Conclusion: Towards a Resilient Financial System

References

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  • Federal Reserve Board (2009) Quantitative Easing Explained. Washington: Federal Reserve.
  • Mishkin, F.S. (2019) The Economics of Money, Banking and Financial Markets. 12th edn. Boston: Pearson.
  • Federal Reserve Bank (2020) Functions of the Federal Reserve. Available from: https://www.federalreserve.gov/
  • Brealey, R.A. et al. (2020) Principles of Corporate Finance. 13th edn. New York: McGraw Hill.
  • Federal Reserve Bank (2021) Historical Stock Market Crashes. Available from: https://www.federalreserve.gov/
  • Akerlof, G.A. (1970) 'The Market for 'Lemons': Quality Uncertainty and the Market Mechanism', Quarterly Journal of Economics, 84(3), pp. 488-500.
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  • Basel Committee on Banking Supervision (2010) Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems. Basel: Bank for International Settlements.
  • Barth, J.R., Caprio, G.J., and Levine, R. (2012) Guardians of Finance: Making Regulators Work for Us. Cambridge: MIT Press.
  • Minsky, H.P. (1992) 'The Financial Instability Hypothesis', The Jerome Levy Economics Institute.
  • Kindleberger, C.P. and Aliber, R.Z. (2005) Manias, Panics, and Crashes: A History of Financial Crises. 5th edn. New York: Wiley.
  • Acharya, V.V., Pedersen, L.H., Philippon, T. and Richardson, M.P. (2017) Measuring Systemic Risk. Oxford: Oxford University Press.
  • Brunnermeier, M.K. (2008) 'Deciphering the Liquidity and Credit Crunch 2007–2008', Journal of Economic Perspectives, 23(1), pp. 77-100.
  • Pozsar, Z., Adrian, T., Ashcraft, A. and Boesky, H. (2010) Shadow Banking, Federal Reserve Bank of New York Staff Reports, No. 458.
  • Gorton, G. (2012) Misunderstanding Financial Crises: Why We Don’t See Them Coming. Oxford: Oxford University Press.
  • Stiglitz, J. (2018) Globalization and Its Discontents Revisited. Penguin.
  • Eichengreen, B. (2008) Globalizing Capital: A History of the International Monetary System. Princeton University Press.
  • Kaminsky, G.L. and Reinhart, C.M. (2000) 'On crises, contagion, and confusion', Journal of International Economics, 51(1), pp. 145-168.
  • Allen, F. and Gale, D. (2000) 'Financial contagion', Journal of Political Economy, 108(1), pp. 1-33.
  • Rogoff, K. (2002) 'IMF lending practices and austerity', IMF Staff Papers, 47(Supplement), pp. 30-55.
  • Stiglitz, J. (2002) Globalization and Its Discontents. New York: W.W. Norton & Company.
  • Nakamoto, S. (2008) 'Bitcoin: A Peer-to-Peer Electronic Cash System', Retrieved: Bitcoin.org
  • Biais, B., Bisiere, C., and Rostan, P. (2021) 'Blockchain technology and its impact on finance', Annual Review of Financial Economics, 13(1), pp. 129-153.
  • Basel Committee on Banking Supervision (2010) Basel III: International Regulatory Framework for Banks. BIS.
  • Roubini, N. (2010) Crisis Economics: A Crash Course in the Future of Finance. Penguin.
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