Financial Markets and Financial Crises: A Historical Approach

A.Y. 2018/2019
6
Max ECTS
40
Overall hours
SSD
SECS-P/12
Language
English
Learning objectives
The goal of the course is to give an overview of evolution of financial markets from the Middle Ages to XXIst century, and to discuss the several financial crises that are as old as financial markets themselves. The primary aim is not to focus on facts, events, theories or figures but rather to see the big picture in an integrative framework in a very long-run perspective. Then special attention will pe paid to the key interrelationship between financial innovation, government regulation and financial crises across three thousand years, showing through past successes and failures the key factors that underpin any successful recovery and foster economic growth. Thusly, a series of workable solutions that will help both to preserve the gains we have already achieved and to mitigate the dangers of future crises will appear clear.

The students attending the course will be able:

- to understand the causes of past crises and to remodel a conceptual framework that ties common elements together and underscores critical differences

- to develop a good command of the evolution of the timing, facts, and discontinuties of financial history from the Medieval Age up to date

- to be familiar with the major influential changes in the financial markets since 1700

- to be able to single out and discuss technological, cultural and institutional factors responsible for changes in financial markets

- to appreciate historical developments that led to different trajectories of financial change in different regions and in different periods

- to appreciate the potential role of history in guiding current financial policies and debates
Expected learning outcomes
Undefined
Course syllabus and organization

Single session

Responsible
Lesson period
Second trimester
ATTENDING STUDENTS
Course syllabus
First Section programme:

The Origins of Money
From Unit of Account to Means of Payment.
Anatomy and physiology of the financial systems between XIIth and XVIIth cc:
Bimetallic circulation, fairs, bourses and bills of exchange;
Early loan tools. The Italian cities trade and financial firsts;
The usury debate;
Public debt and private credit. Informal networks and formal institutions;
The proto-financial markets of government debts and the sovereign debt crises of Spain and France;
The Bisenzone fairs of exchange as international capital market in Italy during the XVIth and XVIIth centuries;
The emergence of Dutch financial primacy: The corporate finance of trade companies;
The first bubble: The Tulip Mania (1634-1637).
The Financial Revolution in XVIIth century-England: the Origins of (Modern) Public Finance:
The Development of Instruments of State Debt;
The question of credibility and the making of financial markets;
The First International Financial Crisis:
John Law and his experiment with France (1715-1726);
The South Sea Bubble in England (1720);
The consequences on the evolution of financial markets.
The Begininng of the Divergence Between Market-Oriented and Bank-Oriented System during the 19th century:
The Lender of Last Resort; Central versus Free Banking.
The Market-Oriented System:
The Railway Mania of 1847 and the new Corporate Finance;
The development of the financial market in England;
The development of the financial market in the USA: from Hamilton to Wall Street;
The Panic of 1907, and American high finance and the foundation of the Federal Reserve (1913).

Second Section programme:

The Bank-Oriented Systems:
- the Banking Revolution at the mid of XIX century: causes, dynamic and weakness.
-the France case: from Saint-Simonism to Pereire-Rotschild competition.
-the German Case.
-the Spanish Case.
Italian Banking system form Unification to WWI:
-the First Wave of Foreign Bank.
-the banks crisis of 1885-93 and the end of the French model banking.
-German Banking in Italy: mixed banks and industrial take-off during the Belle Époque.
-the modernization of the Italian Stock Exchange: the Borsa Valori of Milan.
-the crisis of 1907 and the role of Bank of Italy.
-Lessons from the Italian and Spanish Cases.
Financial Markets in the Interwar Period:
-Golden Fetters: The Gold Standard and the Great Depression, 1919-1939.
-The Instability of the Monetary Systems.
The End of a New Era: the Crash of 1929 and its Aftermath:
-Anatomy and Interpretation of 1929 Crisis.
-Responses to the crisis.
Stock Market and Growth in Oriented-Market Countries (1950-71).
Banks and Firms in Bank-Oriented Countries (1950-1971).
The Failure of Bretton Woods System and Dominance of the New Liberal Order (1971-to present):
-Speculation in time of Cowboy Capitalism.
-From the 1987 one to dotcom Bubble.
-From Securitization, Subprime Bubble and the Great Recession (2008-present)
Lessons from History. Financial Crisis: a Hardy Perennial?
NON-ATTENDING STUDENTS
Course syllabus
First Section programme:
The Origins of Money
From Unit of Account to Means of Payment.
Anatomy and physiology of the financial systems between XIIth and XVIIth cc:
Bimetallic circulation, fairs, bourses and bills of exchange;
Early loan tools. The Italian cities trade and financial firsts;
The usury debate;
Public debt and private credit. Informal networks and formal institutions;
The proto-financial markets of government debts and the sovereign debt crises of Spain and France;
The Bisenzone fairs of exchange as international capital market in Italy during the XVIth and XVIIth centuries;
The emergence of Dutch financial primacy: The corporate finance of trade companies;
The first bubble: The Tulip Mania (1634-1637).
The Financial Revolution in XVIIth century-England: the Origins of (Modern) Public Finance:
The Development of Instruments of State Debt;
The question of credibility and the making of financial markets;
The First International Financial Crisis:
John Law and his experiment with France (1715-1726);
The South Sea Bubble in England (1720);
The consequences on the evolution of financial markets.
The Begininng of the Divergence Between Market-Oriented and Bank-Oriented System during the 19th century:
The Lender of Last Resort; Central versus Free Banking.
The Market-Oriented System:
The Railway Mania of 1847 and the new Corporate Finance;
The development of the financial market in England;
The development of the financial market in the USA: from Hamilton to Wall Street;
The Panic of 1907, and American high finance and the foundation of the Federal Reserve (1913).
Second Section programme:
The Bank-Oriented Systems:
- the Banking Revolution at the mid of XIX century: causes, dynamic and weakness.
-the France case: from Saint-Simonism to Pereire-Rotschild competition.
-the German Case.
-the Spanish Case.
Financial Markets in the Interwar Period:
-Golden Fetters: The Gold Standard and the Great Depression, 1919-1939.
-The Instability of the Monetary Systems.
The End of a New Era: the Crash of 1929 and its Aftermath:
-Anatomy and Interpretation of 1929 Crisis.
-Responses to the crisis.
Stock Market and Growth in Oriented-Market Countries (1950-71).
Banks and Firms in Bank-Oriented Countries (1950-1971).
The Failure of Bretton Woods System and Dominance of the New Liberal Order (1971-to present):
-Speculation in time of Cowboy Capitalism.
-From the 1987 one to dotcom Bubble.
-From Securitization, Subprime Bubble and the Great Recession (2008-present)
Lessons from History. Financial Crisis: a Hardy Perennial?
SECS-P/12 - ECONOMIC HISTORY - University credits: 6
Lessons: 40 hours