2023 - EC4304 - Financial Markets - Institutions Course Outline

NATIONAL UNIVERSITY OF LESOTHO
Department of Economics
Faculty of Social Sciences
Course outline 2022/2023
Course Title: Financial Markets & Institutions
Course Code: EC4304 No. of Credits: 11
Department: Economics Faculty: Social Sciences
Pre-requisite Course Code: EC3301 &

Co-requisite Course Code:
EC3302
Course Coordinator/Instructor: R.I. Thamae
Email: [email protected] Telephone: Ext. 3591
Notional hours: 108
Student Quota: N/A
Course Type
√
Core Course Compulsory Elective
Offer in academic year
√
1st Semester 2nd Semester Year Long
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Course Description
Financial Markets & Institutions analyses the relationship between financial institutions,
monetary policy and macroeconomic stability. It covers the role of financial institutions and
markets within the economy; how financial institutions are regulated to promote financial
stability; and the policy approaches of the major international financial institutions.
Course Objectives
The broad aims of this course are to:
1. Determine how financial markets and institutions influence the economy;
2. Analyse how the monetary authorities use regulation to promote financial stability.
Evaluation
Coursework 33%
Final examination 67%
Recommended Book
Mishkin, F.S. and Eakins, S.G. (2018). Financial Markets and Institutions 9th Ed,
Pearson.
A Remark
Other necessary materials, including the lecture notes, that we will make use of at some stages in
the course will be provided.
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Course Content
1 Why Understand the Financial System? [1 Week]

1.1 Structure of the Financial System
1.2 Financial Crises
1.3 The International Financial System
1.4 Financial Innovation
Reading(s): Mishkin & Eakins Chap. 1-2
Presentations:
Global Stability Reports [Reference: International Monetary Fund (IMF) 2022 Global
Stability Reports.]
2 Financial Institutions & Development [3 Weeks]

2.1 Why do financial institutions exist?
2.2 Types of Financial Institutions
2.3 Theories of Financial Intermediation
2.4 Financial Development & Economic Growth
2.5 Informal Financial Sector & Its Emergence
Reading(s): Mishkin & Eakins Chap. 2 & 7
Presentations:
Financial Reforms & Credit Extension in Lesotho (1980-1993): [Reference: Ayaya,

O. O. (1997). Financial reform and credit extension in Lesotho. Development Southern
Africa, 14(4), 547-560.]
Lesotho’s Financial Sector During & After Reforms – Successes & Failures:
[Reference: Matlanyane, A. R. (2002). The Need for Policy Coherence for Financial
Liberalisation in Southern Africa - Lessons from a Small Developing Economy.]
Macrofinancial Linkages in Lesotho [Reference: IMF Country Report No. 18/59]
Financial Inclusion: What Have We Learned So Far? What Do We Have to

Learn? [Reference: IMF Working Paper No. 20/157]
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3 Financial Innovation, Crises & Regulation [3 Weeks]
3.1 Why do Financial Crises Occur?
3.2 Dynamics of Financial Crises
3.3 Financial Regulation
3.4 The Process of Financial Innovation
Reading(s): Mishkin & Eakins Chap. 2, 8, 18 & 19
Presentations:
The State of Digital Financial Services in Lesotho [Reference: World Bank Group
2020 Digital Economy Diagnostic]
Kingdom of Lesotho: Implementation of Basel II [Reference: IMF Country Report

No. 20/222]
Financial Safety Nets and Bank Resolution Frameworks in Southern Africa: Key
Issues and Challenges [Reference: World Bank Group 2019 Report]
4 Financial Markets & Interest Rates [3 Weeks]

4.1 Types of Financial Markets
4.2 Why do interest rates change?
4.3 Risk Structure of Interest Rates
4.4 Term Structure of Interest Rates
Reading(s): Mishkin & Eakins Chap. 2-5
Presentation:
Term spreads and the COVID-19 pandemic: Evidence from international

sovereign bond markets [Reference: Zaremba et al. (2021). Finance Research Letters,
102042]
5 International Financial Institutions & Policy [2 Weeks]

5.1 The Gold Standard
5.2 The Bretton Woods Systems
5.3 Cost and Benefits of a Monetary Union
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5.4 The IMF
5.5 The World Bank
5.6 The African Development Bank
Presentation:
Regional Development Banks in the World Economy [Reference: Clifton et al.

(2021) Oxford University Press]
Course Learning Outcomes (CLO) Aligned Learning Programme

Students who successfully complete the course will Outcomes (BA Economics)
be able to:
1. Evaluate how financial institutions and 1. Produce high quality graduates

markets influence the economy; employable by the public and private
sectors locally, regionally and
2. Analyse how both national and
internationally;
international monetary authorities use
regulation to promote financial stability. 2. Empower our graduates to contribute
to the economic, social and political
well-being of their nations.
Course Policy
Students and staff of NUL are expected to demonstrate high commitment to honesty, integrity,
and professionalism. Any cheating such as test/examination malpractice or misconduct and
plagiarism are strictly forbidden at NUL. Plagiarism is defined as ‘the form of cheating which
consists of using the ideas or work of another person or persons as if they were one’s own
without giving proper credit to the source’ (NUL draft Policy and procedures on cheating and
plagiarism, 2012:1). All forms of academic cheating are harshly punished at NUL. The claim of
ignorance of cheating is no basis of excuse! http://nul/student/plagiarims for further details.
Signature: R.I. Thamae Date: February 2023
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NATIONAL UNIVERSITY OF LESOTHO

Course outline 2022/2023

Course Title: Financial Markets & Institutions

Course Code: EC4304 No. of Credits: 11

Department: Economics Faculty: Social Sciences

Pre-requisite Course Code: EC3301 &

Course Coordinator/Instructor: R.I. Thamae

Email: [email protected] Telephone: Ext. 3591

Notional hours: 108

Student Quota: N/A

Offer in academic year

1. Determine how financial markets and institutions influence the economy;

1 Why Understand the Financial System? [1 Week]

2 Financial Institutions & Development [3 Weeks]

Financial Reforms & Credit Extension in Lesotho (1980-1993): [Reference: Ayaya,

Macrofinancial Linkages in Lesotho [Reference: IMF Country Report No. 18/59]

Financial Inclusion: What Have We Learned So Far? What Do We Have to

Kingdom of Lesotho: Implementation of Basel II [Reference: IMF Country Report

4 Financial Markets & Interest Rates [3 Weeks]

Term spreads and the COVID-19 pandemic: Evidence from international

5 International Financial Institutions & Policy [2 Weeks]

Regional Development Banks in the World Economy [Reference: Clifton et al.

Course Learning Outcomes (CLO) Aligned Learning Programme

1. Evaluate how financial institutions and 1. Produce high quality graduates

Signature: R.I. Thamae Date: February 2023

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