ECON42740 The Economics of Banking & Financial Stability

Academic Year 2023/2024

This module covers the economics of banking and the financial system with a particular focus on financial stability issues. We will cover three principal topics.

1. Banking and the financial system
Introduction to banking; banking regulation; central banks; the financial system and the growth of finance; household and business finances in the US and Europe.

2. Asset prices and the bond market
Stock prices; house prices; asset price bubbles; macro-prudential policies; the bond market; the yield curve; sovereign debt markets.

3. Financial crises
Financial globalisation and financial instability; history of the international monetary system; Latin American debt crises; sudden stop crises; the global financial crisis of 2008; the euro crisis.

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Curricular information is subject to change

Learning Outcomes:

By the end of this module, you will have a good understanding of how the banking system works, how the global financial system operates and how they interact with the global economy.

You will be knowledgeable about economic issues relating to regulation of the banking system and some wider issues relating to financial regulation more generally.

You will understand debates among leading economists about the determinants of assets prices.

You will be aware of the economics of how bond markets operate and the information that can be obtained from bond yields.

You will understand how the global financial system has evolved since the 1960s and how the globalisation of the financial system has introduced new kinds of financial and economic crises and changed the role of the IMF.

You will be familiar with the factors underlying several different modern financial crises, from the East Asian crisis of the late 1990s, the global financial crisis of 2008/09 and the euro crisis of 2010/12 as well as their resolution.

Indicative Module Content:

1. Introduction to banking
2. Banking regulation: theory and practice
3. Central banks and the banking system
4. The wider financial system and the growth of finance
5. Asset prices and macro-prudential policy
6. The bond market
7. Sovereign debt sustainability and crises
8. Financial globalisation and financial instability
9. The global financial crisis of 2008/09
10. The euro crisis of 2010-2012

Student Effort Hours: 
Student Effort Type Hours
Autonomous Student Learning






Approaches to Teaching and Learning:
The module co-ordinator will provide lecture notes, videos and readings for each topic. Students will be expected to watch videos and/or do readings prior to coming to class so that class time can be used for discussion, debate and clarification of the key issues for each topic. Students will be expected to do this preparatory work and to come to class ready to engage with the module co-ordinator and the rest of the class. 
Requirements, Exclusions and Recommendations

Not applicable to this module.

Module Requisites and Incompatibles
Not applicable to this module.
Assessment Strategy  
Description Timing Open Book Exam Component Scale Must Pass Component % of Final Grade In Module Component Repeat Offered
Attendance: Active participation in the activities undertaken during classes. Attending class without participating will not receive credit. Throughout the Trimester n/a Alternative linear conversion grade scale 40% No


Project: A case study project on a specific event relating to banking crises, financial crises or financial instability. Week 11 n/a Alternative linear conversion grade scale 40% No


Examination: Final exam 2 hour End of Trimester Exam No Alternative linear conversion grade scale 40% No



Carry forward of passed components
Resit In Terminal Exam
Summer Yes - 2 Hour
Please see Student Jargon Buster for more information about remediation types and timing. 
Feedback Strategy/Strategies

• Feedback individually to students, on an activity or draft prior to summative assessment
• Feedback individually to students, post-assessment

How will my Feedback be Delivered?

The lecturer will be available throughout the term to provide feedback and assistance on preparing for the assessment. Post assessment feedback will be available to all students that request it.