ECON5130 Financial Systems and The Economy - 2019

Term 3
6 Units of Credit
On Campus
The course outline is not available for current semester. To view outlines from other years and/or semesters, visit the archives .

1. Course Details

Summary of Course

An important component of modern economies is the financial system. Particularly since the 1980s, the “financialisation” of the economies across the globe, with the unprecedented influence of capital markets and their intermediaries that this process has involved, has had increasingly visible effects on households and firms. Modern financial development, including innovations of financial instruments and institutes, has drastically increased the borrowing and savings opportunities of households and firms. However, there is also an increasing awareness that economies’ performances are now deeply interlinked and subject to greater economic volatility than in the past.

This course will provide an introduction of how financial markets operate, with an emphasis on their impact upon the economy. With the guidance of the instructor, students will explore the functioning of financial markets and how they shape behaviours, constraints and opportunities in key economic areas that households, firms, financial intermediaries and policy makers operate in. We attempt to provide a key contribution to students’ understanding of the role of finance and financial institutions and how they deliver positive economic outcomes in significant ways.

Teaching Times and Locations

Please note that teaching times and locations are subject to change. Students are strongly advised to refer to the Class Timetable website for the most up-to-date teaching times and locations.

View course timetable

Course Policies & Support

Course Aims and Relationship to Other Courses

ECON5130 is an elective subject in the Master of Economics and Finance at UNSW. It is closely related with ECON1102 and ECON2102 (Macroeconomics I & II), and FINS5512, Financial Markets and Institutions. Students are strongly encouraged to study those courses before enrolling. The course is designed to be self-contained and suitable for a wide range of candidates from different backgrounds who are interested in relevant topics.

2. Staff Contact Details

Position Title Name Email Location Phone Consultation Times
Lecturer-in-chargeDrYiyuan XieRoom 436, UNSW Business School9385 7019Monday 9:00-11:00, 14:00-15:00 or by appointment

Communication with staff​

Feel free to contact the Lecturer in Charge about any academic matter. However, for efficiency, it is strongly encouraged that all enquiries are made at lectures or tutorials or during consultation time. The Lecturer in Charge will try to reply emails within 2 working days, but will avoid answering emails about basic information, e.g., exam time, coverage, homework requirements, etc., if it is already available on Moodle.

3. Learning and Teaching Activities

Approach to Learning and Teaching in the Course

​The philosophy underpinning this course and its Teaching and Learning Strategies are based on “Guidelines on Learning that Inform Teaching at UNSW”. Specifically, the lectures, tutorials and assessment have been designed to appropriately challenge students and support the achievement of the desired learning outcomes. A climate of inquiry and dialogue is encouraged between students and teachers and among students (in and out of class). The lecturers and tutors aim to provide meaningful and timely feedback to students to improve learning outcome.

Learning Activities and Teaching Strategies

The examinable content of the course is defined by the references given in the Lecture Schedule, the content of Lectures, and the content of the Tutorial Program.


Lectures are a central part of the learning activity, and they provide a logical structure for the topics that make up the course. Lectures emphasize the important concepts and methods of each topic, and provide relevant examples to which the concepts and methods are applied. It also provides an interactive environment where any enquiry/confusion can be answered immediately with face-to-face communication. Attending lectures is students' essential responsibility for the learning process. Topics covered in the lectures will not be answered through email or consultations.


Tutorials provide opportunity to practice the concepts of each topic, and better understand the course contents. Tutorial discussion questions will be built on the material discussed in class with the lecturer. The focus of the tutorials will be on the question set and presentations by the students.

Out-of-Class Study

While students may have preferred individual learning strategies, it is important to note that most learning will be achieved outside of class time. In an advanced topic like this, the lecturer can only provide a structure and basic concepts to assist your study, and tutorial time is limited.

A good strategy (on which the provision of the course materials is based) might include:

  • If your macroeconomics knowledge is rusty, you might need to review it before your classes start.
  • Read the relevant chapter(s) of the text and any readings before the lecture. This will give you a general idea of the topic area.
  • Attend all lectures. Here the context of the topic in the course and the important elements of the topic are identified. The relevance of the topic will be explained.
  • Attend tutorial in an active way.

5. Course Resources

​The website for this course is on UNSW Moodle.

The principle textbooks for this course are:

  • Money, Banking, and the Financial System (MBFS), by Glenn Hubbard and Anthony Patrick O'Brien, Pearson, 2014
  • Financial Institutions, Instruments and Markets (FIIM), Christopher Viney and Peter Phillips, McGraw-Hill, 2012

Further textbooks that may assist your learning include:

  • Modern Financial Macroeconomics. Panics, Crashes, and Crises, by T.A. Knoop (TAK), Blackwell Publishing, 2008
  • Financialization at Work: Key Texts and Commentary, Routledge 2008 Capital in the Twenty-First Century Thomas Piketty , Harvard University Press, 2013
  • A Short History of Financial Euphoria John Kenneth Galbraith , Penguin Books, 1994
  • Financialization and the World Economy Gerald A. Epstein , Edward Elgar Publishing Ltd 2006
  • Financialisation in Crisis. Volume editor Costas Lapavitsas , Brill 2012
  • The Economics of Money, Banking and Financial Markets, Frederic Mishkin and Apostolos Serletis, Pearson, 2011

6. Course Evaluation & Development

Feedback is regularly sought from students and continual improvements are made based on this feedback. At the end of this course, you will be asked to complete the myExperience survey, which provides a key source of student evaluative feedback. Your input into this quality enhancement process is extremely valuable in assisting us to meet the needs of our students and provide an effective and enriching learning experience. The results of all surveys are carefully considered and do lead to action towards enhancing educational quality.

​The School of Economics strives to be responsive to student feedback. If you would like more information on how the design of this course and changes made to it over time have taken students’ needs and preferences into account, please contact the Director of Education at the School of Economics.

Student feedback is collected through our daily communication with students, and constructive comments will be addressed immediately within the term in a timely manner. Feedback obtained through myExperience surveys​ is carefully reviewed every year by teaching staff. Recent changes in response to student feedback include:  

1. The course outline has been revised and the structure of the course redesigned to introduce material in a more progressive, logical, and coherent way. Some lengthy material about federal reserve bank organisations has been re-labelled as elective reading material, and further introduction to central banks' balance sheets and open market operations will be provided.

2. Materials about banking has been re-organized. More practical examples have been provided.

3. Articles for presentation have been changed to reflect recent updates in course materials.

4. Advanced material has been provided for students who wish to pursue a higher level of understanding and academic achievement;  

5. Our friendly teaching staff will provide more comprehensive assistance about course-related issues, including guidance for the group assignment and provide extra consultation hours before the final exam.

7. Course Schedule

Note: for more information on the UNSW academic calendar and key dates including study period, exam, supplementary exam and result release, please visit:
Week Activity Topic Assessment/Other
Week 1: 16th SeptemberLecture

Financial System: An Overview;


Reference: Ch1-2 MBFS, Ch1, 12 FIIM


Tutorial questions about lecture 1

Online questionnaires and feedback are provided in the tutorial.

Week 2: 23rd SeptemberLecture

Payment System; Interest Rate, Term and Risk Structure

Reference: Ch2-Ch3 MBFS


Tutorial questions about lecture 2

Online questionnaires and feedback are provided in the tutorial.

Week 3: 30th SeptemberLecture


Reference: Ch10 MBFS


Tutorial questions about lecture 3

Online questionnaires and feedback are provided in the tutorial.

Week 4: 7th October

Public Holiday. No lecture or tutorial presented.

Week 5: 14th OctoberMidterm Exam

Midterm Exam held during lecture time.


Feedback session following the Midterm Exam will be provided during tutorial this week.

Week 6: 21st OctoberLecture

Central Banking and Money Market

Monetary Policy

Reference: Ch14 MBFS, Ch15 MBFS


Tutorial questions about lecture 4

Online questionnaires and feedback are provided in the tutorial.

Group presentations are held and feedback provided.

Week 7: 28th OctoberLecture

Monetary Economics I



Reference: Ch17.1-4 MBFS,



Tutorial questions about lecture 5

Online questionnaires and feedback are provided in the tutorial.

Group presentations are held and feedback provided.

Week 8: 4th NovemberLecture

Monetary Economics II

Reference: Ch18 MBFS


Tutorial questions about lecture 6

Online questionnaires and feedback are provided in the tutorial.

Group presentations are held and feedback provided.

Week 9: 11th NovemberLecture

The Stock Market, Information and Financial Market Efficiency

Reference: Ch6 MBFS


Tutorial questions about lecture 7

Online questionnaires and feedback are provided in the tutorial.

Group presentations are held and feedback provided.

Week 10: 18th NovemberLecture

Derivatives and Shadow Banking System

Reference: Ch7, Ch11 MFBS


Tutorial questions about lecture 8

Online questionnaires and feedback are provided in the tutorial.

Group presentations are held and feedback provided.

8. Policies and Support

Information about UNSW Business School protocols, University policies, student responsibilities and education quality and support.

Program Learning Outcomes

The Business School places knowledge and capabilities at the core of its curriculum via seven Program Learning Outcomes (PLOs). These PLOs are systematically embedded and developed across the duration of all coursework programs in the Business School.

PLOs embody the knowledge, skills and capabilities that are taught, practised and assessed within each Business School program. They articulate what you should know and be able to do upon successful completion of your degree.

Upon graduation, you should have a high level of specialised business knowledge and capacity for responsible business thinking, underpinned by ethical professional practice. You should be able to harness, manage and communicate business information effectively and work collaboratively with others. You should be an experienced problem-solver and critical thinker, with a global perspective, cultural competence and the potential for innovative leadership.

All UNSW programs and courses are designed to assess the attainment of program and/or course level learning outcomes, as required by the UNSW Assessment Design Procedure. It is important that you become familiar with the Business School PLOs, as they constitute the framework which informs and shapes the components and assessments of the courses within your program of study.

PLO 1: Business knowledge

Students will make informed and effective selection and application of knowledge in a discipline or profession, in the contexts of local and global business.

PLO 2: Problem solving

Students will define and address business problems, and propose effective evidence-based solutions, through the application of rigorous analysis and critical thinking.

PLO 3: Business communication

Students will harness, manage and communicate business information effectively using multiple forms of communication across different channels.

PLO 4: Teamwork

Students will interact and collaborate effectively with others to achieve a common business purpose or fulfil a common business project, and reflect critically on the process and the outcomes.

PLO 5: Responsible business practice

Students will develop and be committed to responsible business thinking and approaches, which are underpinned by ethical professional practice and sustainability considerations.

PLO 6: Global and cultural competence

Students will be aware of business systems in the wider world and actively committed to recognise and respect the cultural norms, beliefs and values of others, and will apply this knowledge to interact, communicate and work effectively in diverse environments.

PLO 7: Leadership development

Students will develop the capacity to take initiative, encourage forward thinking and bring about innovation, while effectively influencing others to achieve desired results.

These PLOs relate to undergraduate and postgraduate coursework programs.  Separate PLOs for honours and postgraduate research programs are included under 'Related Documents'.

Business School course outlines provide detailed information for students on how the course learning outcomes, learning activities, and assessment/s contribute to the development of Program Learning Outcomes.



UNSW Graduate Capabilities

The Business School PLOs also incorporate UNSW graduate capabilities, a set of generic abilities and skills that all students are expected to achieve by graduation. These capabilities articulate the University’s institutional values, as well as future employer expectations.

UNSW Graduate CapabilitiesBusiness School PLOs
Scholars capable of independent and collaborative enquiry, rigorous in their analysis, critique and reflection, and able to innovate by applying their knowledge and skills to the solution of novel as well as routine problems.
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 7: Leadership development

Entrepreneurial leaders capable of initiating and embracing innovation and change, as well as engaging and enabling others to contribute to change
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 6: Global and cultural competence
  • PLO 7: Leadership development

Professionals capable of ethical, self-directed practice and independent lifelong learning
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 5: Responsible business practice

Global citizens who are culturally adept and capable of respecting diversity and acting in a socially just and responsible way.
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 5: Responsible business practice
  • PLO 6: Global and cultural competence

While our programs are designed to provide coverage of all PLOs and graduate capabilities, they also provide you with a great deal of choice and flexibility.  The Business School strongly advises you to choose a range of courses that assist your development against the seven PLOs and four graduate capabilities, and to keep a record of your achievements as part of your portfolio. You can use a portfolio as evidence in employment applications as well as a reference for work or further study. For support with selecting your courses contact the UNSW Business School Student Centre.

Academic Integrity and Plagiarism

Academic Integrity is honest and responsible scholarship. This form of ethical scholarship is highly valued at UNSW. Terms like Academic Integrity, misconduct, referencing, conventions, plagiarism, academic practices, citations and evidence based learning are all considered basic concepts that successful university students understand. Learning how to communicate original ideas, refer sources, work independently, and report results accurately and honestly are skills that you will be able to carry beyond your studies.

The definition of academic misconduct is broad. It covers practices such as cheating, copying and using another person’s work without appropriate acknowledgement. Incidents of academic misconduct may have serious consequences for students.


UNSW regards plagiarism as a form of academic misconduct. UNSW has very strict rules regarding plagiarism. Plagiarism at UNSW is using the words or ideas of others and passing them off as your own. All Schools in the Business School have a Student Ethics Officer who will investigate incidents of plagiarism and may result in a student’s name being placed on the Plagiarism and Student Misconduct Registers.

Below are examples of plagiarism including self-plagiarism:

Copying: Using the same or very similar words to the original text or idea without acknowledging the source or using quotation marks. This includes copying materials, ideas or concepts from a book, article, report or other written document, presentation, composition, artwork, design, drawing, circuitry, computer program or software, website, internet, other electronic resource, or another person's assignment, without appropriate acknowledgement of authorship.

Inappropriate Paraphrasing: Changing a few words and phrases while mostly retaining the original structure and/or progression of ideas of the original, and information without acknowledgement. This also applies in presentations where someone paraphrases another’s ideas or words without credit and to piecing together quotes and paraphrases into a new whole, without appropriate referencing.

Collusion: Presenting work as independent work when it has been produced in whole or part in collusion with other people. Collusion includes:

  • Students providing their work to another student before the due date, or for the purpose of them plagiarising at any time
  • Paying another person to perform an academic task and passing it off as your own
  • Stealing or acquiring another person’s academic work and copying it
  • Offering to complete another person’s work or seeking payment for completing academic work

Collusion should not be confused with academic collaboration (i.e., shared contribution towards a group task).

Inappropriate Citation: Citing sources which have not been read, without acknowledging the 'secondary' source from which knowledge of them has been obtained.

Self-Plagiarism: ‘Self-plagiarism’ occurs where an author republishes their own previously written work and presents it as new findings without referencing the earlier work, either in its entirety or partially. Self-plagiarism is also referred to as 'recycling', 'duplication', or 'multiple submissions of research findings' without disclosure. In the student context, self-plagiarism includes re-using parts of, or all of, a body of work that has already been submitted for assessment without proper citation.

To see if you understand plagiarism, do this short quiz:


The University also regards cheating as a form of academic misconduct. Cheating is knowingly submitting the work of others as their own and includes contract cheating (work produced by an external agent or third party that is submitted under the pretences of being a student’s original piece of work). Cheating is not acceptable at UNSW.

If you need to revise or clarify any terms associated with academic integrity you should explore the 'Working with Academic Integrity' self-paced lessons available at:

For UNSW policies, penalties, and information to help you avoid plagiarism see: as well as the guidelines in the online ELISE tutorials for all new UNSW students: For information on student conduct see:

For information on how to acknowledge your sources and reference correctly, see: If you are unsure what referencing style to use in this course, you should ask the lecturer in charge.

Student Responsibilities and Conduct

Students are expected to be familiar with and adhere to university policies in relation to class attendance and general conduct and behaviour, including maintaining a safe, respectful environment; and to understand their obligations in relation to workload, assessment and keeping informed.

Information and policies on these topics can be found on the 'Managing your Program' website.


It is expected that you will spend at least ten to twelve hours per week studying for a course except for Summer Term courses which have a minimum weekly workload of twenty to twenty four hours. This time should be made up of reading, research, working on exercises and problems, online activities and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater. Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities.

We strongly encourage you to connect with your Moodle course websites in the first week of semester. Local and international research indicates that students who engage early and often with their course website are more likely to pass their course.

View more information on expected workload


Your regular and punctual attendance at lectures and seminars or in online learning activities is expected in this course. The Business School reserves the right to refuse final assessment to those students who attend less than 80% of scheduled classes where attendance and participation is required as part of the learning process (e.g., tutorials, flipped classroom sessions, seminars, labs, etc.).

View more information on attendance

General Conduct and Behaviour

You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class.

View more information on student conduct

Health and Safety

UNSW Policy requires each person to work safely and responsibly, in order to avoid personal injury and to protect the safety of others.

View more information on Health and Safety

Keeping Informed

You should take note of all announcements made in lectures, tutorials or on the course web site. From time to time, the University will send important announcements to your university e-mail address without providing you with a paper copy. You will be deemed to have received this information. It is also your responsibility to keep the University informed of all changes to your contact details.

Student Support and Resources

The University and the Business School provide a wide range of support services and resources for students, including:

Business School EQS Consultation Program
The Consultation Program offers academic writing, literacy and numeracy consultations, study skills, exam preparation for Business students. Services include workshops, online resources, individual and group consultations.
Level 1, Room 1035, Quadrangle Building.
02 9385 4508

Communication Resources
The Business School Communication and Academic Support programs provide online modules, communication workshops and additional online resources to assist you in developing your academic writing.

Business School Student Centre
The Business School Student Centre provides advice and direction on all aspects of admission, enrolment and graduation.
Level 1, Room 1028 in the Quadrangle Building
02 9385 3189

UNSW Learning Centre
The UNSW Learning Centre provides academic skills support services, including workshops and resources, for all UNSW students. See their website for details.
Lower Ground Floor, North Wing Chancellery Building.
02 9385 2060

Educational Support Service
Educational Support Advisors work with all students to promote the development of skills needed to succeed at university, whilst also providing personal support throughout the process. Check their website to request an appointment or to register in the Academic Success Program.
John Goodsell Building, Ground Floor.
02 9385 4734

Library services and facilities for students
The UNSW Library offers a range of collections, services and facilities both on-campus and online.
Main Library, F21.
02 9385 2650

Moodle eLearning Support
Moodle is the University’s learning management system. You should ensure that you log into Moodle regularly.
02 9385 3331

UNSW IT provides support and services for students such as password access, email services, wireless services and technical support.
UNSW Library Annexe (Ground floor).
02 9385 1333

Disability Support Services
UNSW Disability Support Services provides assistance to students who are trying to manage the demands of university as well as a health condition, learning disability or who have personal circumstances that are having an impact on their studies. Disability Advisers can arrange to put in place services and educational adjustments to make things more manageable so that students are able to complete their course requirements. To receive educational adjustments for disability support, students must first register with Disability Services.
Ground Floor, John Goodsell Building.
02 9385 4734

UNSW Counselling and Psychological Services
Provides support and services if you need help with your personal life, getting your academic life back on track or just want to know how to stay safe, including free, confidential counselling.
Level 2, East Wing, Quadrangle Building.
02 9385 5418

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