FIN42130 Banking& Finance inDigital Age

Academic Year 2022/2023

This module provides an overview of the financial landscape in the digital era, with special emphasis on the role of FinTech (and its close cousins, such as RegTech and SupTech) and how it impacts the financial sector.
The course will start with a review of the emergent new players and services, including digital currencies, blockchains, cryptographic tokens, and related topics in the FinTech domain, perhaps the most significant innovation in the financial world since the advent of double-entry bookkeeping centuries ago.
The course will then take a step back and review how and why the financial sector has evolved the way it has. We will begin with a study of the nature of money and legacy payment and banking systems. We will then study the emergence of stateless, decentralized, cloud-based digital currency systems since 2009, and follow-on investment products, derivatives, and innovations such as initial coin offerings and crowd-funding.
Understanding the historical evolution of the financial sector and the emergent role of FinTech and related developments will require a discussion of the economic functions of markets and financial intermediaries, with an emphasis on their role in the solution of the information processing problem entailed by the allocation of financial resources in the economy. To gain insight on this, the course will provide a review of the traditional theory of financial intermediation and an introduction to modern information economics.
This set of theories and conceptual tools will be applied to understating the role that FinTech and other developments in modern digital finance can play in information processing and in completing financial markets. We will also examine at the same time the challenges they face, conditions for their development, their impact on incumbent financial intermediaries. We will explore threats that blockchain technology poses to incumbent firms and even to central banks and their resulting attempts to co-opt the technology into existing business models. We will survey related issues including hacking, “smart contracts,” governance, investment risk and return, and emerging regulatory approaches to these assets.

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Curricular information is subject to change

Learning Outcomes:

1. Understand key historical developments in banking and finance and they relate to the modern developments in digital finance
2. Identify threats and opportunities for incumbent and new entrant financial sector players alike
3. Formulate advice to incumbent and new entrant financial sector players based on an understanding of trends and structure of the financial sector in the digital finance era

Indicative Module Content:

Module Aims
The aims of this module are to
• Develop students’ understanding of key concepts in finance and banking, especially the different roles and economic functions of financial markets and financial intermediaries
• Enable students to formulate and evaluate strategic choices of banks and other financial institutions and financial market players, including emerging ones in the DeFi and Digital Finance landscape
• Allow students to assess the impact of new regulation on the financial sectors and the players within it
Module Learning Outcomes
On completing this module, students will be expected to be able to:
• Describe the various components of the financial system, the key players, institutions and their interaction, including emerging ones in the DeFi and Digital Finance landscape
• Describe and analyse the role and interplay of financial markets, financial intermediaries and regulation in the functioning of the wider economy

Student Effort Type Hours
Lectures

24

Autonomous Student Learning

164

Total

188

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
Assignment: There will be 2/3 assignments throughout the course. They will involve a report/paper plus presentation. Varies over the Trimester n/a Graded No

50

Class Test: Mostly or all MCQs, especially on the basics of banking and the theory of financial intermediation. Varies over the Trimester n/a Graded No

50


Carry forward of passed components
Yes
 
Remediation Type Remediation Timing
In-Module Resit Prior to relevant Programme Exam Board
Feedback Strategy/Strategies

• Group/class feedback, post-assessment

How will my Feedback be Delivered?

Not yet recorded.

Module Textbooks:
• Frederic S Mishkin and Stanley Eakins (2018), Financial Markets and Institutions, Global Edition, 9/E, ISBN-13: 9781292215006
webpage: http://catalogue.pearsoned.co.uk/educator/product/Financial-Markets-and-Institutions-Global-Edition-9E/9781292215006.page#downlaoddiv
• Harvey, Campbell R. and Ramachandran, Ashwin and Santoro, Joseph, DeFi and the Future of Finance (April 5, 2021). Available at SSRN: https://ssrn.com/abstract=3711777 or http://dx.doi.org/10.2139/ssrn.3711777
Supplementary Text:
Brealey, R.A, S.C. Myers and Marcus, A. J., (2012), Fundamentals of Corporate Finance, 7th edition, McGraw Hill Higher Education. ISBN: 978-007-1314-74-9.
Spring
     
Lecture Offering 1 Week(s) - 20, 21, 22, 23, 24, 25, 26, 29, 30, 31, 32, 33 Wed 09:00 - 10:50
Tutorial Offering 1 Week(s) - 20, 21, 22, 23, 24, 25, 26, 29, 30, 31, 32, 33 Wed 11:30 - 12:20
Spring
     

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