Module Information

Module Identifier
Module Title
Academic Year
Semester 1
Other Staff

Course Delivery

Delivery Type Delivery length / details
Lecture 20 Hours - two hours per week
Seminars / Tutorials 5 Hours
Lecture Help class 1 hour per week


Assessment Type Assessment length / details Proportion
Semester Exam 2 Hours   Unseen written examination  80%
Semester Assessment 2000 word essay  20%
Supplementary Exam 2 Hours   Repeat Failed Elements or equivalent  Unseen written examination  100%

Learning Outcomes

On successful completion of this module students should be able to:

Describe, explain and illustrate the structure, characteristics, attributes, purposes and operation of financial markets.

List, describe, explain and illustrate the charcateristics, attributes, uses and trading of a variety of financial market instruments.

Explain, analyse and evaluate the rationale for existence of financial institutions and theneed for financial intermediation.

Explain and analyse the regulation risks faced by banks; and the management of bank risk.

List, describe, explain, illustrate, compare and contrast, and critically evaluate alternative perspectives on market efficiency and behavioral finance.

Brief description

This module aims to provide students with a thorough treatment of: (i) the characteristics, functions and mechanisms of financial markets; (ii) the role of financial markets/institutions in supplying finance and managing risk; (iii) the need for and provision of financial intermediation; and (iv) perspectives on market efficiency and behavioural finance.


1. Introduction to financial markets
  • Physical and over-the-counter markets
  • Continuous and call markets
  • Money and capital markets
  • Primary and secondary markets
  • Stock and flow markets
  • Current issues within the global financial markets
2. Financial instruments and innovation
  • Traditional financial instruments
  • Modern financial instruments
  • Theories of financial innovation
  • Asset-backed securitisation
  • Role of technology in financial innovation
3. Market Microstructure
  • Trading Systems
  • The London Stock Exchange
  • Market participants
  • Trading arrangements
4. Principles of Banking
  • Retail and Commercial Banking
  • Major roles of retail, commercial, and investment banks
  • Wholesale and Investment banking
  • Off-balance-sheet business
5. Financial intermediation
  • Direct financing or disintermediation
  • The process of financial intermediation
  • Reasons for financial intermediation
  • Banking and non-banking financial intermediaries
  • Arbitraging, hedging and speculating
6. Risk and regulation in banking

  • Different risks facing banks
  • Risk management in banks
  • Prudential control of banks
  • Key elements of bank regulation and supervision
  • Reasons for bank regulation
  • International bank supervision – Basel I, II, and III accord
  • Case study: bank runs
7. Market Efficiency and Efficient market hypothesis
  • Concept and types of market efficiency
  • Information efficiency and the EMH
  • Types of trading analysis
  • Fund or portfolio management techniques
  • Implications of EMH
8. Behavioural finance
  • Illustration and structure
  • Modeling behavioural aspects of finance
  • Mispricing of risky assets
  • Market anomalies
  • Reasons for market anomalies
  • Categories of market anomalies

Module Skills

Skills Type Skills details
Application of Number * Develop an easy familiarity with numerical data sources and numerical data * Apply numerical data to problem solving with care and accuracy * Assess the reasonableness of and interpret numerical solutions * Support assertions/arguments with appropriately developed and presented numerical data
Communication * Develop confidence in and clarity of oral communication via tutorial participation * Develop clarity and focus of written communication via: * assignment production * development of answers to tutorial questions * Develop and use appropriate subject-specific vocabulary in oral and written communication
Improving own Learning and Performance * Identify and distil the key issues covered by lectures, tutorials and self study * Identify and use a range of learning resources * Investigate benefits of small group working on self study * Structure study to accommodate intensive learning
Information Technology * Use a variety of electronic web- and library-based resources to review available information and retrieve pertinent information * Use various software packages for the production of the assignment (text, numerical tables and analysis, graphics)
Personal Development and Career planning * Develop knowledge and skills of analysis of financial markets, institutions and products which are useful/essential in a number of different occupations * Identify a variety of potential career opportunities within the financial and professional services sector
Problem solving * Identify the precise problem to be solved * Assess which data are pertinent to the problem * Recognize that alternative solution methods might be available * Select and apply appropriate methods for solving the problem * Assess the reasonableness of problem solutions and interpret those solutions
Research skills * Identify which information sources are available to: * facilitate module study (understanding, wider reading) * provide information to facilitate the analysis of financial markets * provide raw input to the production of the assignment * Select the most pertinent information for retrieval * Retrieve information * Re-assess the pertinence and assess the credibility of retrieved information * Properly reference/attribute information sources
Subject Specific Skills * Develop competence in understanding and analyzing financial market transformations and market efficiency.
Team work * Develop experience of team work and develop team working skills via small group working on self study

Reading List

Recommended Text
Buckle, M. J. (c2004.) The UK financial system :theory and practice /Mike Buckle and John Thompson. 4th ed. Manchester University Press Primo search
Supplementary Text
Blake, David (2000.) Financial market analysis /David Blake. 2nd ed. Wiley Primo search Howells, P and K Bain (2007) Financial Markets and Institutions 5th edition FT Prentice Hall Primo search Rutterford, Janette (June 2007) An Introduction to Stock Exchange Investment 3rd ed.,Revised Palgrave Macmillan Primo search Valdez, Stephen (Dec. 2006) An Introduction to Global Financial Markets Earlier editions of these texts are also satisfactory 5th ed.,Revised Palgrave Macmillan Primo search


This module is at CQFW Level 6