This module is offered to MA students only.

Module Content



The course explores key theoretical and empirical issues pertaining to the role of finance in the process of the economic development, and it links these issues to emerging economies of Central and Eastern Europa and Asia in comparative perspective with advanced and developing economies. The course starts with the theoretical conceptualisation of financial development that is ascribed a role to mitigate the effects of information imperfections. It overviews the elements of the financial system and its key functions within the economy, and it examines various indicators measuring financial development and talks about recent trends in finance as influenced by digital technology. Next, some of the dominant theoretical models and concepts of financial development are discussed, with emphasis on their application, relevance and usefulness for emerging economies. The course moves on with exploring next the finance-growth nexus, presenting theoretical arguments and empirical evidence on the impact of finance on economic growth. The financial sector plays a crucial role in the growth process through allocating savings towards investment projects, and so increasing the rate of capital accumulation and altering the rate of technological innovation, both regarded as fundamental for long-term economic growth. The course examines the importance of a variety of financial development measures on growth and whether financial structure matters. We consequently focus on whether the effect of financial development is conditional on the quality of institutional development of countries. Next, we examine the access to finance for smaller firms and factors that help easing up financing constraints for them. The course proceeds with discussing other critical themes in understanding the role of finance in economic development, including economic busts and financial crises, and the scope for tighter financial regulation. Finally, we explore the role of the financial sector on promoting inclusive growth, alleviating poverty and inequality.



Indicative topics:



The Concept of Financial Development and its Measures   
 Theoretical Models of Financial Development: a Historical Perspective
 Finance and Growth: Modern Theoretical Approach & Empirical Evidence
 Does Financial Structure Matter for Growth?
 Institutional Context of Finance-Growth Nexus
 Access to Finance by Small and Medium-Sized Firms
 Financial Liberalisation
 Financial Fragility, Systemic Risk and Financial Crises
 Financial Regulation & Financial Stability
 Financial Development, Alleviation of Poverty and Inequality
Teaching Delivery



The course is taught by a 1.5-hour lecture weekly and one-hour tutorial fortnightly. Total workload includes attendance at lectures and seminars, coursework preparation, reading and revision for a final exam.  Tutorial format is mixed and it is comprised of practical assignments where students are expected to collect and analyse financial data, present on an assigned topic, take part in the debates and class discussions. Assessment is comprised of summative assessment which is an individual empirical coursework project (100%); and formative assessment of students’ work in tutorials to provide them with ongoing feedback on oral presentations to facilitate their learning as it progresses.



By the end of the module, you should be able to:



Understand the theoretical concepts pertaining to financial development and its role in the wider economy.

 Develop analytical skills necessary to relate existing theories to the analysis of financial development in advanced and emerging economies with implications for sustainable and inclusive growth in comparative perspective.

Become aware of the key current problems and issues surrounding financial sector in the emerging economies of Central and East Europe and Asia with the ability to draw policy implications.