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Emerging Financial Markets

Fall 2011 EMBA Course

B7399-004: Emerging Financial Markets

Block Week 4, Block week Oct 3 - 7 (London)

Instructor: Charles Calomiris

This course explores the main risk factors in the financial systems of emerging market countries (EMs) over the past three decades, and historically. The course shows how one can use characteristics of countries to predict their companiesâ?? and governmentsâ?? performance and risks. EMs are countries that have decided to "emerge" from a condition of financial under-development (sometimes called "financial repression"). EMs engage in a program of market-oriented reforms which include: foreign trade opening, privatization of state-owned enterprises, and the liberalization and deregulation of domestic financial systems and international capital markets. Emergence typically involves a variety of such changes, as well as related institutional changes that support those efforts (reforms of the legal and regulatory systems, the corporate laws, and the fiscal and monetary systems). This course investigates the determinants of successful or unsuccessful emergence. Said differently, the course helps to identify factors that make emergence more or less likely to succeed. Failure of emergence often takes the form of a major financial crisis, in which the failings of the EM policy regime are brought to light. Thus, an important part of analyzing the success or failure of emergence entails the analysis of EM financial crises. The course reading materials include a book [Emerging Financial Markets, by David Beim and Charles Calomiris, 2001 (EFM)], various articles noted below, various case studies, and the lecture slides, which will be distributed for each class. The book is available for free, along with the individual readings. Students are expected to prepare for class by reading the assigned readings and preparing case solutions as a group for each case. The case solutions will be submitted in writing by teams of four or five students. Students are responsible for forming teams. Team lists must be submitted in hard copy form to the instructor at the beginning of class. Grading is based on team case solutions (35%), individual class participation (30%), and a take-home final exam that will test knowledge from the readings and lectures for the class (35%). The take-home final exam will be handed out December 8 and will be due December 15. The final exam will consist of multiple choice and short-essay questions that will test comprehension of the material in the required readings and the class discussions. It should take no more than 3 hours to complete the exam. Case solutions should be no more than four pages of text (double-spaced, Times Roman 12 font with normal margins), which follow a one-page executive summary. Up to five pages of charts and tables may be attached. The syllabus refers to many readings. Only some readings are required, and these are available in the readings packet. Additional readings listed in the syllabus are background to lectures. These will be available to students, but are not required.