International Finance

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This course provides an understanding of the financial markets from the global perspective. Students will gain insights into international financial markets, foreign exchange rate, risk management and the cryptocurrency trading. The course also includes practical applications of theories and concepts using real-world case studies

Session 1: Introduction to International Finance (1,5 hours) – Feenstra, Harms, Bekaert-Hodric

• Globalization and its implications on international finance

• Importance of international finance in the business world

Session 2-4: Foreign Exchange rates (4,5 hours) Feenstra, Harms, Bekaert-Hodric

• Exchange rate determination

• Theory of exchange rate behavior in the long run: The monetary approach

• Theory of exchange rate behavior in the short run: The asset approach

• Forecasting exchange rates

Session 5-7: Balance of payments (4,5 hours) – Feenstra, Harms

• Overview of balance of payments (BOP) and national income accounting

• The relationship between the BOP, the nation’s wealth, and living standards in the long run

• The relationship between the BOP, exchange rates, and the demand for output in the short run

Session 8: Exchange Rate Systems (1,5 hours) Feenstra, Harms, Bekaert-Hodric,

• Flexible exchange rate systems

• Fixed exchange rate systems

• Exchange rate crisis

•The Eurozone and the theory of optimum currency areas

Session 9: Monetary Policy, Fiscal Policy, and Agregate Demand in an Open Economy (1,5 hours) – Philip Harms, Feenstra

• Flexible exchange rate systems

• Fixed exchange rate systems

• Exchange rate crisis

• The Eurozone and the theory of optimum currency areas

Session 10: The Nature of the Shock Matters: Some Model-Based Results on the Macroeconomic Effects of Exchange Rate (1,5 hours) – Sophie Haincourt

• ‘Good’ Versus ‘Bad’ Currency Appreciations

• The ‘Good’ and the ‘Bad’ (in NiGEM): Model-Based Simulations

• Lessons for the Recent Dollar and Euro Fluctuations (2014–16)

Session 11: International Financial Flows in the New Normal: Key Patterns (and Why We Should Care) (1,5 hours) – Matthieu Bussière, Julia Schmidt and Natacha Valla

• Global Financial Flows: Dwindling to a Trickle

• The Geographical Pattern of Global Financial Flows: Stylized Facts

• When the Composition of Capital Flows Matters

• Changing Composition of International Financial Flows: Explanatory Factors and Implications

• https://doi.org/10.1007/978-3-319-79075-6_13

Session 12-: Cryptocurrency (1,5 hours)

• Cryptocurrency trading

• Cryptocurrency trading Software Systems

• Portfolio, cryptocurrency assets and market condition research

• Opportunities in cryptocurrency trading

• Cryptocurrency in the system of money laundering

• Cryptocurrencies and monetary policy

Session 13: International Debt Financing (1,5 hours)

• The global sources of funds for international firms

• The characteristics of debt instruments

• A tour of the world’s bond markets

• International banking

• International bank loans

Session 14: International Equity Financing (1,5 hours)

• A tour of international stock markets

• International cross-listing and depositary receipts

• Strategic alliances

Session 15: Foreign Currency Futures and Options (1,5 hours)

• The Basics of Futures Contracts

• Hedging Transaction Risk with Futures

• Basics of Foreign Currency Option Contracts

• The Use of Options in Risk Management

• Combinations of Options and Exotic Options

Session 16: Interest Rate and Foreign Currency Swaps (1,5 hours)

• Introduction to Swaps

• Interest Rate Swaps

• Foreign Currency Swaps

1. Bekaert, G., & Hodrick, R. (2017). International financial management. Cambridge University Press.

2. Harms P. (2016). International Macroeconomics 2nd, Neue ökonomische Grundrisse

3. Madura, J. (2020). International financial management. Cengage Learning.

4. Feenstra, R., Taylor, A. (2021). International Macroeconomics. Macmillan

5. Ferrara, L., Hernando, I., & Marconi, D. (Eds.). (2018). International Macroeconomics in the wake of the Global Financial Crisis (Vol. 46). Springer.

6. Haincourt, S. (2018). The Nature of the Shock Matters: Some Model-Based Results on the Macroeconomic Effects of Exchange Rate. International Macroeconomics in the Wake of the Global Financial Crisis, 233-247.

7. Bussière, M., Schmidt, J., & Valla, N. (2018). International financial flows in the new normal: Key patterns (and why we should care) (pp. 249-269). Springer International Publishing.

8. Giudici, G., Milne, A. & Vinogradov, D. Cryptocurrencies: market analysis and perspectives. J. Ind. Bus. Econ. 47, 1–18 (2020). https://doi.org/10.1007/s40812-019-00138-6

9. U. Mukhopadhyay, A. Skjellum, O. Hambolu, J. Oakley, L. Yu and R. Brooks, "A brief survey of Cryptocurrency systems," 2016 14th Annual Conference on Privacy, Security and Trust (PST), Auckland, New Zealand, 2016, pp. 745-752, doi: 10.1109/PST.2016.7906988.

10. Fang, F., Ventre, C., Basios, M. et al. Cryptocurrency trading: a comprehensive survey. Financ Innov 8, 13 (2022). https://doi.org/10.1186/s40854-021-00321-6

11. Dyntu, V., & Dykyi, O. (2018). CRYPTOCURRENCY IN THE SYSTEM OF MONEY LAUNDERING. Baltic Journal of Economic Studies, 4(5), 75-81. https://doi.org/10.30525/2256-0742/2018-4-5-75-81

By the end of the course, students will be able to:

1. Understand the structure and functioning of international financial markets.

2. Identify and manage risks associated with international finance.

3. Understand the dynamics of foreign exchange rates and currency derivatives.

4. Evaluate the impact of international financial management decisions on a firm's financial performance.

5. Apply theoretical knowledge to real-world international finance problems and scenarios.

1. Final Exam: 90%

2. Class Participation: 10%

Passing rule: 50%+1