Module description
The financial crisis that started 2007 in the American subprime mortgage market has casts a long shadow over the global political economy. The decade after the crisis has been marked by dealing with this crisis and its repercussions. Understanding the crisis and its consequences requires careful consideration of the workings of finance in modern economies, as well as different theoretical frameworks. The module will cover the role of banks and finance in contemporary capitalism; different theories of financial instability; the subprime crisis in the USA, the Euro crisis, and recent financial crises in emerging markets. Emphasis is placed on situating those crises in broader international economic and financial developments over the last four decades. The module also highlights theoretical pluralism and controversy by reviewing key debates on the causes of financial crises. Finally, mechanisms of transmission of financial crises on the real economy and different economic policy reactions are examined.
*Please note that module information is indicative and may change from year to year.
Assessment details
One 3,000 word research essay (100%)
Educational aims & objectives
- to cover key areas of modern finance and their interrelations: how finance as a distinct domain of the economy works, how it has change over the last decades, why financial crises happen, and how they affect the real economy;
- to disseminate systematic understanding of theoretical debates about the causes and consequences of financial crises;
- to demonstrate the application of established theories to political crisis management in past and future crises.
Learning outcomes
At the end of the module students will be able to:
- explain fundamental concepts in banking and finance
- describe the current state of research in the political economy of financial crises;
- choose an appropriate mix of sources to critically assess the main empirical debates in sub-fields of the political economy of financial crises;
- identify and critically evaluate the main policy tools to manage financial crises
- relate and contrast the reasoning, principles, goals and instruments of the key players in finance and financial regulation.
Teaching pattern
Two hours per week, one lecture and one seminar
Indicative Teaching Schedule
Week 1: Introduction: The growth of finance and financial crises
Week 2: Money & banking: What do banks and central banks do?
Week 3: Financial markets and shadow banking
Week 4: Financial globalisation, capital flows and current account imbalances
Week 5: The US subprime crisis and its management
Week 6: Mainstream approaches to financial crises
Week 7: Heterodox approaches to financial crises
Week 8: The Eurozone crisis and its management
Week 9: Sources of the Eurozone crisis: balance-of-payments, banking sector or public finances?
Week 10: Emerging markets during and after the GFC
Note that this teaching schedule is indicative and subject to change.
Suggested reading list
- Guttmann, Robert (2016) Finance-led Capitalism. Shadow Banking, Re-regulation, and the Future of Global Markets. Basingstoke: Palgrave Macmillan.
- Mian, Atif and Sufi, Amir (2015) House of Debt. How They (and You) Caused the Great Recession and How We Can Prevent It from Happening Again. University of Chicago Press.
- Tooze, Adam (2018) Crashed: How a Decade of Financial Crises Changed the World. Penguin.