Financial Markets and Financial Crises: a Historical Approach

A.Y. 2019/2020
6
Max ECTS
40
Overall hours
SSD
SECS-P/12
Language
English
Learning objectives
The goal of this 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 numbers but rather to see the big picture in an integrative framework in a very long-run perspective. 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. We will discuss the lessons that we can draw for financial markets today.
Expected learning outcomes
Undefined
Course syllabus and organization

Single session

Responsible
Lesson period
Second trimester
Course syllabus
First Section (3 cfu - 20 h) 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 (3 cfu - 20 h) 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 Financial (and Banking) system from Unification to WWII:
-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.
- the Bank law of 1936 and the new frame of the financial system
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?
Prerequisites for admission
No prerequisite is needed.
Teaching methods
Lectures, flipped classroom, and interactive presentations.
Students are expected to actively partecipate preparing the required readings before each class.
Teaching Resources
Required readings for non attending students:

- Neal, L. A Concise History of International Finance. From Babylon to Bernanke, Cambridge, Cambridge University Press, 2016, chapters: 1, 2, 3, 4, 5, 7, 9, 10, 12, 13, 14;
and

- Vogel, H., Financial Market Bubbles and Crashes, Cambridge University Press, 2009, chapters: 1, 2, 4, 5, 7, 9, 10, 11;

Attending students must study class notes and other teaching material assigned during the course.
Assessment methods and Criteria
For attending students, the assessment is composed: 50% by class activities (class discussions and class presentations) and 50% by a written final exam based on the teaching materials and notes used during lectures.
While the class partecipation is intended to verify the learnig outcomes of the course (critical thinking, probelm solving, ability to communicate), the written exatm is addressed to ascertain the command of the ideas, events, dates, political dynamics related to the themes of the course.

For non-attending students, the assessment is based on a written final exam, composed of multiple choice and open ended questions. While the multiple choice section is aimed at verifying the learning outcomes of the course (critical thinking, problem solving, ability to communicate), the open ended questions are intended to ascertain the command of the ideas, events, dates, political dynamics related to the themes of the course.
SECS-P/12 - ECONOMIC HISTORY - University credits: 6
Lessons: 40 hours
Professor(s)
Reception:
Thursday 3-5 p.m.