Syllabus INTB 336 Winter 2020-21 rev5 PDF

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INTB 336

International Money and Finance “Global Finance in Crises” Winter 2020-2021 Professor: Dr. Bang JEON [bio on p. 5]

Email: [email protected]

Class hours: 10:00 - 11:50 am, Tuesday & Thursday, REMOTE 

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https://drexel.zoom.us/j/92626247211

 Meeting ID: 926 2624 7211 Office hours: 10:00 - 11:00 am, Wednesday, remote 

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https://drexel.zoom.us/j/86229171269 

Meeting ID: 862 2917 1269

Textbook [required]: Cheol S. Eun and Bruce G. Resnick, International Financial Management, 8th ed., McGraw-Hill, 2018. (The book is denoted as [IFM] in IV. Lecture topics.) ISBN: 9781259717789.

I. Course outline This course will provide the students with an opportunity to re-evaluate the dynamic and drastically changing nature of international economic order in money and finance following the recent global financial crisis of 2008-9. The course will discuss the major contemporary issues in global finance, multinational banking, and international financial system by developing international economic theories and then applying them to real-world examples. The operation of the current international financial markets and monetary system will be discussed, together with various issues on macroeconomic and monetary policies in an open economy. Specific focus is given to global finance, multinational banking, and post-crisis adjustment from the emerging economy perspective. The main topics to be covered in this course include:        

world financial markets and crises: issues and trends, foreign exchange (FX) markets, FX rates and currency arbitrage foreign exchange derivatives and currency risk hedging in crisis, theoretical and empirical relationships among exchange rates, interest rates, inflation, and risks, EU, EMU and euro, issues on optimum common currency areas, international banking and money markets, bond markets and stock markets, international portfolio diversification, global financial crises: contagion, government responses, and solutions, 1

 international capital flows, multinational banks, and internal capital markets,  the role of global banking and multinational banks in crisis contagion,  post-crisis reforms, COVID-19 and new international economic/financial order. II. Prerequisites Basic micro and macroeconomics. Familiarity with algebraic manipulation and diagrammatic exposition will be helpful, although it is not essential. III. Course requirements 1. Each student's final grade will be based on his/her total points earned during the term: Homeworks (6 HWs@5) 30 points Mid-term exam (Week #5, Thurs., Feb. 11) Final exam (Week #10, University schedule)

30 points 30 points

Participation and attendance 10 points (attendance/attitude and participation in the class discussion) Bonus points (1-5 points for one voluntary presentation of assigned cases per student)

----------------------------------------------------------------------------------[Course Total] 100 points 2. Policies a. Exam will be a combination of multiple choice (50%) and short essay/application questions (50%). b. An active participation in class discussion is important in this course. Attendance and participation will be incorporated in the participation score, which is a 10% portion of your course grade. Academic honesty and integrity are important in this course. [Please refer to the Student Handbook.] http://drexel.edu/studentlife/community_standards/studenthandbook/ c. If you need specific assistance on disability, course drop among others, please let me know. http://drexel.edu/oed/disabilityResources/faculty/SyllabusStatement/ http://www.drexel.edu/provost/policies/course-withdrawal/ d. The determination of your final course grades is based on the following scale (each letter grade scale has three sub-scales of +, 0 and –): 100 - 98: A+, 97 – 94: A, 93 - 90: A-, 89 - 87: B+, 86 - 83: B, 82 - 80: B-, 79 - 77: C+, 76 – 73: C, 72 – 70: C-, 69 - 67: D+, 66 - 63: D, 59 - : F 2

*A significant improvement and sincere attitudes toward learning throughout the course will be considered for a possible moving up of your course grade.

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IV. Lecture Topics 1. The World Economy: Challenges and Opportunities (Week #1) - [IFM 8th ed.] Ch. 1 The overview of the contemporary world economy and finance The U.S. economy in the global context 2. Foreign exchange markets and systems in crisis (Week #1, 2) -

[IFM 8th ed.] Chs. 2, 5

Foreign exchange rates and int’l transactions: arbitrage Foreign exchange rate systems: fixed, floating, and managed floating The new European currency, the Euro and challenges Choice of optimal foreign exchange market systems in crisis 3. Foreign exchange market instruments: Risk hedging (Week #2, 3) - [IFM 8th ed.] Chs. 7, 8 Foreign exchange risk exposures Foreign exchange risks and uncertainty Foreign exchange derivatives: Speculation and risk hedging Foreign exchange risk management in crisis 4. Exchange rates, interest rates, and interest parity (Week #3, 4) - [IFM 8th ed.] Ch. 6

Covered vs. uncovered interest arbitrage transactions Decision making of where to invest: Rules I, II, and III Theoretical and empirical interest rate parity (IRP) lines: the neutral band Transaction costs, information costs, and political risks * HW #1, 2, and 3: due on Thurs, 1/21 (Week #2), 1/28 (#3), and 2/4 (#4) * Review sessions: Week #4 (2/4) and #5(2/9) ** Mid-term Exam: (Week #5, Thurs., Feb 11) covers topics 1 through 4 5. Determination of exchange rates, exchange rate volatility, and FX rate forecasting (Week #6, 7) -

[IFM 8th ed.] Ch. 6

Purchasing power parity (PPP): Theory and evidence The asset market approach and the monetary approach to the exchange rate determination Foreign exchange rate forecasting: Efficient market and market-based approach 4

6. Global banking and financial crises (Week #7, 8) - [IFM 8th ed.] Ch. 11

Commercial banking; investment banking; shadow banking The role of the Central Bank Financial crisis and global banking Multinational banking and crisis contagion The retrenchment in international capital flows and global banking Crisis contagion through global banking in emerging economies The role of foreign banks in emerging economies Financial and banking crisis management in emerging economies International banking and capital adequacy: Basel I, II, III. 7. Integration/globalization of world financial markets and new order of international finance (Week #8, 9) - [IFM 8th ed.] Chs. 2, 4, 12

The Eurocurrency market, International bond markets and global money markets International stock markets and portfolio investment, [IFM 8th ed.] Chs. 13, 15  Global investment: return vs. risk  Gain from international portfolio diversification  Financial crisis and global risk management IMF bailouts of national currency/financial crisis Asian crisis vs. and global currency/financial crisis: Lessons and international financial architecture Deleveraging and rethinking economic paradigms * Review sessions: Week #9 (3/9 & 3/11) * HW #4, 5, and 6: due on Thurs, 2/25 (Week #7), 3/4 (#8), and 3/11(#9) ** The Final Exam: (University schedule, Week #10, 3/15-3/20) covers topics 5 through 7

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Bang Nam Jeon, Ph.D.

JEON Bang Nam is Professor of Economics and International Business at School of Economics, Bennett S. LeBow College of Business, Drexel University in Philadelphia, PA. He holds a Ph.D. in Economics from Indiana University. He has held positions with Southwestern University of Finance and Economics, China, as a chair professor, RoseHulman Institute of Technology, Indiana, as an assistant professor, Hudson Institute as a consultant, and an economist at Korea Exchange Bank, Seoul, Korea. His research interests include international finance and banking, financial economics, FDI and international commercial policy, and regional economic integration among Asia-Pacific economies. He has published papers on a wide variety of contemporary international economics and business issues in refereed economics and international business journals, such as Brookings Papers on Economic Activity, Journal of International Money and Finance, Journal of Banking and Finance, Journal of Financial Stability, Review of International Economics, Pacific-Basin Finance Journal, Transnational Corporations (United Nations), East Asia Law Review (University of Pennsylvania Law School), and Journal of the Japanese and International Economies. Dr. Jeon has recent books, “Global Banking, Financial Markets and Crises” (November 2013) and “Emerging Market Finance: New Challenges and Opportunities,” (October 2020), published by Emerald Publishing Group, UK, respectively. https://www.amazon.com/Banking-Financial-Markets-International-Finance/dp/1783501707/ref=sr_1_1/1814824851-6281437?s=books&ie=UTF8&qid=1389828467&sr=1-1 https://www.amazon.com/Emerging-Market-Finance-Opportunities-International/dp/1839820594

Dr. Jeon has been teaching at Drexel University since 1988 at all levels of undergraduates, MBA classes, Executive MBA (EMBA) programs, and Ph.D. program. He was the 2013 President of the Korea-America Economic Association (https://kaea.org/) in the U.S. Dr. Jeon visited the Bucharest University of Economic Studies in Bucharest, Romania, as the Fulbright U.S. Scholar during February-June 2021. Contact: [email protected]. 1/1/2021

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Remote learning policies at Drexel [as of 9/21/2020] STATEMENT ON RECORDING OF CLASS INTERACTIONS Appropriate Use of Course Materials It is important to recognize that some or all of the course materials provided to you are the intellectual property of Drexel University, the course instructor, or others. Use of this intellectual property is governed by Drexel University policies, including the IT-1 policy found at: https://drexel.edu/it/about/policies/policies/01-Acceptable-Use/ Briefly, this policy states that all course materials including recordings provided by the course instructor may not be copied, reproduced, distributed or re-posted, unless otherwise given prior written approval by the University. Doing so may be considered a breach of this policy and will be investigated and addressed as possible academic dishonesty, among other potential violations. Improper use of such materials may also constitute a violation of the University’s Code of Conduct found at: https://drexel.edu/cpo/policies/cpo-1/ and will be investigated as such. Recording of Class Activities: In general, students and others should not record course interactions and course activities in lecture, lab, studio, or recitation. Students who have an approved accommodation from the Office of Disability Resources to record online lectures and discussions for note taking purposes should inform their course instructor(s) of their approved accommodation in advance. The recording of lectures and discussions may only be carried out by the students enrolled in the class who have an approved accommodation from Disability Resources with their instructors’ prior knowledge and consent. Students with approved accommodations may be asked to turn off their recorder if confidential or personal information is presented. If a student has any comments, concerns, or questions about provided class materials and/ or recording, talk to your course instructor first. If this does not resolve the issue, you can also reach out to the Department Head, and use the process described for a grade appeal to move your concern forward. The process described for grade appeals can be found at: https://drexel.edu/provost/policies/grade-appeals/ General Technical Support Students who need technical support can use the following contacts. When emailing, consider including a phone number for tech representatives to call back if needed. 

Drexel Accounts (can’t log in, multi-factor authentication, Office365) Email: [email protected]



Zoom support (logging in, using Zoom, etc.) 1) Help option within the Zoom app

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2) LeBow Tech: [email protected] (low urgency questions during business hours) 3) Drexel 24/7 support: 215-895-1224 (high urgency or issues after business hours) 

Blackboard Support (Course materials, videos, assignments, tests, etc.) 1) Drexel 24/7 support: 215-895-1224 2) LeBow Instructional Tech: [email protected]



Business software/vApps (SAS, JMP, MATLAB, Minitab, Stata, etc.) LeBow Tech: [email protected]

Appropriate Use of Course Materials It is important to recognize that some or all of the course materials provided to you may be the intellectual property of Drexel University, the course instructor, or others. Use of this intellectual property is governed by Drexel University policies, including the IT-1 policy found at: https://drexel.edu/it/about/policies/policies/01-Acceptable-Use/ Briefly, this policy states that all course materials including recordings provided by the course instructor may not be copied, reproduced, distributed or re-posted. Doing so may be considered a breach of this policy and will be investigated and addressed as possible academic dishonesty, among other potential violations. Improper use of such materials may also constitute a violation of the University’s Code of Conduct found at: https://drexel.edu/cpo/policies/cpo-1/ and will be investigated as such. Time Zones and Assignment Due Dates Drexel’s Blackboard servers are located in the Eastern Time Zone (currently observing EDT which is UTC4). All due dates and times should be understood as being displayed in Eastern Time. For example, an assignment that is due at 11:59 PM (EDT) on a Wednesday would be due on Wednesday at 8:59 PM Pacific (PDT) and due on Thursday at 3:59 AM UTC. Students should adjust any deadlines to their own time zone. No changes to due dates/times (or how they display in Blackboard) can be made for students in other time zones.

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Class survey: INTB 336 (Due 12 pm, noon, 1/13)

Name (First name Last name)

What grade are you in?

Specialization / major Your emergency contact point (cell phone, e-mail, …)

International-related courses you have taken and/or you are taking this term

Your global experiences (country, how long, in what capacity?)

Your co-op experiences: Where, when, responsibility and in which industry

Your target grade

Which topics are you most interested in learning and class discussion in this course?

Any comments/suggestions

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