Course Number:            ITRN 602.01

 

Course Title:              International Financial Institutions and the Forces of Globalization

 

This course examines character and dynamics of international financial institutions in the world economy and the interactions between the public and private sectors throughout the world. After a review of the mechanics of international financial systems and operations, the structure and composition of  various governmental financing regimes at the national and subnational levels are examined and their evolution under the influence increasing globalization.  The roles of the international investment and capital markets, international financial and donor institutions in the process of development are covered, with particular emphasis on emerging and transitioning economies. The growth of both international and domestic financial markets and instruments are reviewed, as is the evolving relationship between the public and private sectors.

 

Class Dates:               Wednesdays:  7:05 P.M. - 9:35 P.M.

                                                1st Class -- January 23, 2002

                                                Last Class - May 1, 2002

                                                Final Exam - May 8, 2002 (regular class time)

 

Course Objectives:

This course provides an introduction to and survey of international finance and financial institutions. Aside from the mechanics of international finance. considerable emphasis will be placed on the historic and political context.  The course will be taught from interrelated three perspectives:  First, will be that of the firm that has international financial operations and the basic concepts and procedures it must know in conducting those operations. The second perspective will be that of the private and public financial institutions that are involved in international commerce and international financial relations. This will include not only the banking system but the several specialized institutions that seek to govern or influence international commerce and financial relationships. The third perspective will be of creating financial markets in developing economies and their relationship with the governments. How these are integrated into the international markets and meet capital needs domestically will be an issue in this course. 

                                               

Instructor:                               John E. Petersen            (703) 273-2653 (H)            (703) 807-5700 (W)

                                                                                      eMail  gfg@compuserve.com  or JEP@gmu.edu

 

Method of

Instruction:     This course will be taught as a survey course. Many topics will be covered.  Some may not be considered as thoroughly as one might desire.  It is not a seminar, but I want you to participate in class discussion. Your participation should demonstrate an understanding of the course assignments (please read ahead)  and a familiarity with current developments in the areas of study.  

 

Requirements: Keep abreast of current issues in international finance by reading at least one newspaper with international coverage (Wall Street Journal, Washington Post, New York Times, Financial Times).  The Economist is highly recommended. 

 

                        Participate actively in class discussions. Do your presentations, complete your research papers satisfactorily, and pass examinations.

 

Class              

Presentations: During the semester, you need to stay informed on current developments that are relevant to international finance and financial institutions. As part of your class participation grade, you will be assigned 5-minute individual presentations to be made about current news items dealing with international financial developments. These can be based on clippings from newspapers, magazines, newsletters, or professional journals. Any subject bearing on international finance is fair game.  Your presentation should summarize the news item and then relate it to some concept, practice, or problem in international finance and management, including your observations on its implications.  Please submit a one-page outline of your presentation to me when you give your presentation. I will hand out a schedule of the presentations at the third class session and there will be presentations at most sessions starting thereafter.

 

Interest

Profile:            Please write a brief (not more than one page) profile telling about your background, graduate-level course work, your career aspirations, and your expectations from this course. Please submit the interest profile to me no later than the February 6 class session.

 

Research

Paper:             One research paper is assigned during the semester.  It is not to exceed 10 pages, double-spaced, including any charts or graphics, footnotes and references. I’d greatly appreciate 12 point type size. You may select a topic of interest to you in the area of international finance and financial management. The topic is subject to my approval.  If you wish, you may select one from a list of topics that I will provide.

                       

                        The paper should demonstrate your ability to define the problem, point out its significance and make a reasoned argument as to why proposed or attempted solutions are, or were, better or worse, successful or not.

 

                        Please have your research paper topic submitted no later than the February 20  class session and approved by me no later than February 27.  Research papers are due on or before April 17. Instructions will be provided concerning delivery. 

 

Books & Materials                    James Baker.            International Finance: Management, Markets, and Institutions

                                                            Prentice Hall (1998 edition)

                                                Daniel Yergin and Joseph Stanislaw. The Commanding Heights Touchstone:                                                      Simon and Shuster (1999 edition)

                                                Paul Krugman. The Return of Depression Economics W.W. Norton (2000)

                                                World Bank  World Economic Report (2002)

Federal Reserve Bank of Boston. Building an Infrastructure for Financial Stability Conference #44 (June 2000)

                                                Annual Reports*:  International Monetary Fund, World Bank, InterAmerican                                                                      Development Bank, Asian Development Bank  

                                                                               USAID,  US Export Import Bank, OPIC

                                                                                     (*to be provided)

           

Quiz:                                       There will be a brief 40-minute quiz at the beginning of the March 6 session. It is intended to give both you and me an early indicator of your understanding of the material covered to date. The quiz will consist of short answers and definitions. 

 

Grading:         Weights for the course grade will be as follows:[1]

                                                            Quiz                                         10%

                                                            Research Paper                       30%

                                                            Class Participation                 10%

                                                            Class Presentation                  10%                                                                                                                 Final Examination                  40%

 

Office Hours:                         I will be available before class at the hours given below or in my office by appointment.  My normal office hours for meeting will be 4:00  PM to 6:00 PM on most Wednesdays and Thursdays. Other times are possible.  For an appointment, please call ahead: (703) 807-5700 or (703) 273-2653 (Home). My university emial is address is ______@gmu.edu or you can use gfg@compuserve.com. My office room number is ______________

 

 

Course Schedule:  (Subject to amendment)

 

January 23       Introductions, scope and objectives of course, discussion of presentations and research papers. Basic concepts in international trade and the changing trade environment 

                         Readings: Baker:  Chapter 1

                        Yergin:  Introduction, Chapters 1 to 2

 

January 30:       Basics of the International Monetary System, Foreign Exchange:

 

                        Readings: Baker: Chapters 2 to 4

                                                                          Yergin: Chapters 3 to 5

                                                                         

February 7:      PERSONAL PROFILE DUE

                        Direct Investment and Political Risk

 

                        Readings:   Baker:   Chapter 5 and 6

                                                                        Yergin  Chapters 6 to 8

           

February 13:    RESEARCH PAPER TOPIC DUE

                        Long-term Capital Management: The Firm’s Perspective  

 

                        Readings: Baker:    Chapters  7 and 8  

                        Yergin:   Chapters  9  to 11

                       

February  20:   International Banking: Institutions and Practices

 

                        Readings: Baker: Chapters 9 - 10

                        Yergin: Chapters 12 and 13

 

February 27:    International Securities Markets

                        Readings: Baker:   Chapters 12 and 13

                                                                        Krugman: pp. 1-82.

 

March 7:            QUIZ AT BEGINNING OF CLASS

                        International Financial Crises: Contemporary Challenges to Gobalization

                                                Readings:            Krugman: pp. 83-169

FRB Boston: Building …  Financial Stability  (Roundtable on                                                Preventing Future Crises)

  

March 14:                    NO CLASS

 

March 21:        Multi-National Financial Institutions:

                        Readings: Baker: Chapter 11

                        World Bank:  Summary Annual Report

                        International Monetary Fund:  Summary Annual Report

March 28:        Multi-National Financial Institutions continued:

                                                Readings:            InterAmerican Development Bank   Annual Report

                                                                        Asian Development Bank   Annual Report

 

April 3:             Bi-lateral Trade Institutions and Foreign Assistance Agencies

                                                Readings:        OPIC            Summary Annual Report

                                                                        Ex-IM Bank   Summary Annual Report                                                                                                  US AID  Summary Report

 

April 10:           Research Paper Due: No Class

                       

                       

April 17:           Building Markets and Institutions in Emerging Countries 

                        Readings: World Bank, World Development Report (2001)

                                               

April 24:           Building and Accessing Domestic Financial Markets

                        Readings: World Bank, World Development Report (2001)

 

May 1:             Subsovereign Credit Markets in Emerging Economies    

                        Readings: To be Announced

 

 May 9:                           FINAL EXAM (Regular class time)


[1] Where letter or numeric grades are used, the following is the sequence of equivalence:

A+: 98-100, A: 92-97.9 A-: 90-91.9     B+: 88-89.9, B: 82-87.9,  B-: 80-81.9    C+: 78-79.9. C: 72-77.9, C-: 70-71.9