Syllabus

Title
2247 S3INTF1/2 International Finance
Instructors
Prof. Mojmir Mrak, Ph.D.
Contact details
  • Type
    PI
  • Weekly hours
    2
  • Language of instruction
    Englisch
Registration
09/05/19 to 09/22/19
Registration via LPIS
Notes to the course
Subject(s) Master Programs
Dates
Day Date Time Room
Thursday 12/05/19 09:00 AM - 01:00 PM D4.0.136
Friday 12/06/19 10:30 AM - 02:30 PM D4.0.136
Monday 12/09/19 09:00 AM - 01:00 PM D4.0.136
Tuesday 12/10/19 02:00 PM - 06:00 PM D4.0.136
Wednesday 12/11/19 02:00 PM - 06:00 PM D4.0.136
Thursday 12/12/19 09:00 AM - 01:00 PM D4.0.136
Thursday 12/19/19 09:00 AM - 11:00 AM D5.0.001

Contents

The course consists of three main parts.

  • It will start with the examination of the two main components of the global international financial environment, namely (i) balance of payments (including international investment position), and (ii) exchange rates. This introduction is needed for an analysis of the concept and evolution of the international monetary system and of the international financial governance problems.
  • The second part of the course is aimed at two specific risks in international finance, namely (i) foreign exchange risk (including forecasting of foreign rates based on international party conditions) and (ii) country risk (including political risk as well as economic and financial risk).
  • Within the third part of the course, three specific international finance topics will be analysed in some depth. The first one addresses major issues of European monetary union including optimal currency theory as a theoretical backbone of monetary unions as well as euro-zone’s economic governance prior to the crisis and changes made in this area in recent years. The second topic addresses international capital flows to emerging economies through official flows (multilateral financial institutions) and private flows (selected financial instruments, such as syndicated loans and bonds). The focus of the third topic is the nexus of growing trade tensions with exchange rates currency developments. 

Learning outcomes

The main objective of the course is to give participants a focused overview of international finance issues at the global level. The course is designed to combine both a practical and theoretical approaches to global finance. Students will be put into positions of a various players in international finance (foreign direct and / or portfolio investor, creditor, government of the recipient country, multilateral financial institution, etc.). Mathematical context of the course will be kept to a minimum, with the main focus being on institutional aspects as well as on practical application.

After the course, participants are expected to understand main international finance concepts, their relationship to other macroeconomic aggregates as well as institutional aspects of international finance and capital flows at global level. More specifically, participants will be able:

  • to understand key concepts in international finance,
  • to demonstrate ability to analyse international finance problems and to write issue papers on this subject, and
  • to present ideas on international financial issues in a clear, concise and professional manner
     

Attendance requirements

At least 80% course attendance is necessary to pass.

Teaching/learning method(s)

The course will be carried out as a combination of lectures, exercises and individual assignments to be done by the participants. Reading assignments will be assigned to the students for each of the lectures. Students are expected to stay current in their reading assignment preparation before class, to regularly attend class and to participate actively in the class discussions.

Assessment

    The final grade will be composed on the following four components:

    • 10 per cent - class participation
    • 10 per cent - during the course assignments 
    • 30 per cent - home assignments
    • 50 per cent - final exam

    Students will be assessed on:

    • their knowledge on the content domain of international finance,
    • their ability to understand and analyze the issues presented in their home assignments, and 
    • the quality of presentations in class discussions, the written reports and the examination questions; by quality in this context we mean the clarity and persuasiveness of each bit of work. 

    Prerequisites for participation and waiting lists

    • Completion of the assessment Phase
    • Successful completion of 8 courses within the subject "Grundlagen Finanzwirtschaft, Rechnungswesen und Steuern" ("Basics in Finance, Accounting and Taxes")
    • Allocation to the elective

    Readings

    1 Author: Eiteman, David and Stonehill, Arthur and Moffett, Michael
    Title:

    Multinational Business Finance


    Publisher: Pearson Education
    Remarks: chapters 2,3 (balance on payments, exchange rates )
    Year: 2016
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    Type: Book
    2 Author: Wyplosz, Charles and Burda, Michael
    Title:

    Balance of Payments

    (Provided as VIENNA-2019-Text-1)


    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    3 Author: Calvo, Guilermo and Mishkin, Frederic
    Title:

    The Mirage of Exchange Rate Regimes for Emerging Markets.

    (Provided as VIENNA-2019-Text-2)


    Publisher: NBER Working Paper NO. 9808
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    4 Author: Shapiro, Alan
    Title:

    Multinational Financial Management


    Publisher: Wiley
    Remarks: chapter 6 (on country risk)
    Year: 2010
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    5 Author: Allard, Celine and others
    Title:

    Towards a fiscal union of the Euro area. IMF staff discussion note

    (Provided as VIENNA -2019-TEXT-3)


    Year: 2013
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    6
    Title:

    Capital Flows to Emerging Markets: Looking Past the Turbolence. IIF, October 2018 (on international financial flows to emerging economies)

    (Provided as VIENNA-2019-TEXT-4)


    Year: 2018
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    7 Author: Nelson, Rebecca
    Title:

    Multilateral development banks: overview and issues for Congress. US Congress, July 2018

    (Provided as VIENNA-2019-TEXT-5)


    Year: 2018
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    8 Author: Clark, Ephraim and Levasseur, Michel and Rousseau, Patrick
    Title:

    International Finance

    (Provided as VIENNA-2019-TEXT-6)


    Publisher: Chapman Hill
    Remarks: Chapter 16 and 17 (on syndicated loans and eurobonds)
    Year: 1993
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students
    9 Author: Jordan, Thomas
    Title:

    Protectionism complicates monetary policy, October 2018

    (Provided as VIENNA-2019-TEXT-7)


    Year: 2018
    Content relevant for class examination: Yes
    Recommendation: Essential reading for all students

    Recommended previous knowledge and skills

    Though not obligatory for official enrollment into the course, basic understanding of macroeconomic concepts would be desirable.

    Availability of lecturer(s)

    Lecturer can be contacted via mail: mojmir.mrak@ef.uni-lj.si

    Additional information on MyLEARN.

    A course pack consisting of some of the above texts, presentations and cases will be available before the beginning of the course.

    Unit details

    Unit Date Contents
    1 Part 1

    Conceptual framework for analysing international capital flows (8 hours)

    • Balance of payments account and analysis
    • Exchange rates and exchange rate policies
    • International monetary system: concept and Evolution
    • Global financial governance

    Home assignment No. 1: Finnish maarka

    Home assignment No. 2: Yuan exchange rate developments and internationalization

    2 Part 2

    Specific risks in international finance – foreign exchange risk and country risk (4 hours)

    • Foreign exchange risk concept and instruments for its management – internal vs. external
    • Concept and analytical framework for measuring country risk
    • Credit rating agencies and their importance

    Home assignment No. 3: Country risk of an emerging economy

    3 Part 3

    Euro-zone and its economic governance (3 hours)

    • Optimal currency theory as a theoretical basis of monetary unions
    • Original euro-zone's economic governance
    • Recent crisis of the euro-Zone
    • Reformed economic governance: what has been done and what still needs to be done
    4 Part 4

    International capital flows: general concept and main patterns of international capital inflows into emerging economies (1 hour)

    • International capital flows and macroeconomic aggregates
    • Classification, volume and structure of international capital flows
    • Liberalization of international capital flows
    • Main patterns of financial inflows into emerging economies
    5 Part 5

    Capital flows to emerging economies by instruments – official flows (4 hours)

    • Overall trends
    • Multilateral financial institutions
    • Bilateral official sources
    • Private flows with the focus on syndicated loans and bonds

    Home assignment No. 4: Cooperation of »your country« with MFIs

    6 Part 6

    Capital flows to emerging economies by instruments – private flows (2 hours)

    • Euro-financial market
    • Syndicated loans
    • Eurobonds
    7 Part 7

    Nexus of growing trade protectionism and exchange rate developments: role of central Banks (2 hours)

    • Nexus between trade protectionism and currency wars
    • Monetary policy and its relationship with exchange rates  
       
    Last edited: 2019-09-16



    Back