FIN 396H: Finance and Society
Course Outline and TimeTable - Fall 2021

Class meeting

Topics

Assignments and Student Presentations

• PV Viswanath, Notes on the Financial System
• Gobat, Jeanne, “What is a bank?” Finance and Development, March 2012

Assessments 1, 2, 3 and 3a: Due September 21
Perusall Assignment on Banks due: September 25
Perusall Assignment on First Financial World due: September 25
Perusall Assignment on Corporate Governance due: September 25
Perusall Assignment on Finance and Urbanization due: September 25

Sept 21

Module 2

Corporate Governance
What is the corporation?

• PV Viswanath, Notes on Corporate Governance
• McMillan, John, Reinventing the Bazar: A Natural History of Markets, Chapter 13

No in-class or Zoom meeting
Assessment 4 (Due (September 28)
Text for Corporate Governance from Berk and DeMarzo (Chapter 29) available on BrightSpace

Sept 28

The financial system in history - I
How has the financial system performed in the past in achieving social goals?
No in-class meeting
Topics to be explored include: the origins of finance

• Goetzmann, William. “Finance and Urbanism,” Chapter 2 in Money Changes Everything: How Finance Made Civilization Possible, Princeton University Press: Princeton, NJ.
• Goetzmann, William. “China’s first financial world,” Chapter 8 in Money Changes Everything: How Finance Made Civilization Possible, Princeton University Press: Princeton, NJ.

No in-class or Zoom meeting

Oct 5

The financial system in history - II
How has the financial system performed in the past in achieving social goals?

• Grossman, Richard.  “The Origins of Banking,” in Unsettled Account, Princeton University Press.
• Slides on the Origins of Banking

Assessment 6 (Due October 7)

• Bonnie Martin, “Neighbor-to-Neighbor Capitalism: Local Credit Networks and the Mortgaging of Slaves.”
• Harreld, Donald. “Trading Places: The Public and Private Spaces of Merchants in Sixteenth-Century Antwerp,” Journal of Urban History, Vol. 29 No. 6, September 2003 657-669

Oct 12

The political economy of the financial system.  How is it part of the social system?

• Marco Pagano and Paolo Volpin, “The Political Economy of Finance,” Review of Economic Policy, 2001, vol. 17, no. 4, 502-519 (http://faculty.london.edu/pvolpin/review.pdf)
• Stigler, George.  The Theory of Regulatory Capture, Rand Journal of Management Science, 2 (Spring): 3-21

Assessment 7

• Thorsten Beck, Orkun Saka, Paolo Volpin, “Finance and politics: New insights,” 10 July 2020, https://voxeu.org/article/finance-and-politics-new-insights
• Francesco Trebbi, Atif Mian, Amir Sufi, “Political constraints in the aftermath of financial crises,” 21 February 2012, https://voxeu.org/article/political-constraints-aftermath-financial-crises

Oct 19

Ethics and Finance
What is the role that finance should play in the financial system?  What is the role of markets, and especially financial markets?  When are markets inappropriate?
What is the impact of putting-a-price on the actions of economic agents?

• Sandel, Michael. The Tyranny of Merit, Farrar, Strauss and Giroux: New York, 2020. Chapters 1, 5 and conclusion.
• Sandel, Michael, “Market Reasoning as Moral Reasoning: Why Economists Should Re-engage with Political Philosophy,” Journal of Economic Perspectives—Volume 27, Number 4—Fall 2013—Pages 121–140.

Assessment 8

• Timothy Besley, “What's the Good of the Market? An Essay on Michael Sandel's ‘What Money Can't Buy’” Journal of Economic Literature , June 2013, Vol. 51, No. 2, pp. 478-495
• Roth, Alvin. "Repugnance as a Constraint on Markets," Journal of Economic Perspectives, vol. 21, no. 3, Summer 2007, pages 37-58.

Oct 26

The treatment of financial issues in some religious traditions

• Abbas Mirakhor and Iqbal Zaidi, “Profit-and-loss sharing contracts in Islamic finance,” Chapter 4 of Hassan, Kabir and Mervyn Lewis Handbook of Islamic Banking.
• Visser and McIntosh, A short review of the historical critique of usury, Accounting, Business and Financial History, Vol. 8, no. 2, 1998, http://www.alastairmcintosh.com/articles/1998_usury.htm
• Jillian Alderman, Joetta Forsyth, Richard Walton, “How Religious Beliefs Influence Financial Decision-Making”, Graziadio Business Review, Vol. 20, Issue 3
• Du, Xingqiang, “Does Religion Mitigate Tunneling? Evidence from Chinese Buddhism,” Journal of Business Ethics, 2014, 125: 299-327
• Grullon et al. “Religion and Corporate (Mis)Behavior.”

Assessment 9

• Jared Rubin, “Institutions, the Rise of Commerce and the Persistence of Laws: Interest Restrictions in Islam and Christianity, The Economic Journal, December 2011, Vol. 121, No. 557, pp. 1310-1339
• Jewish law pertaining to interest; https://www.jlaw.com/Articles/ribis1.html

The test will consist of questions on Modules 3, 4 and 5, and only on the assigned readings that were covered on Perusall.  In addition to questions on the actual content, there will be questions that will require you to extrapolate apply concepts learnt in these modules to the American and global financial system. 

Collaborative Finance
Is it possible to have a different kind of financial system, where social capital is built and transactions are connected to social relationships? 

• Georgina M. Gomez, A.H.J. Helmsing, World Development, Vol. 36:11, Pages 2489-2511, Selective Spatial Closure and Local Economic Development: What Do We Learn from the Argentine Local Currency Systems?
• Bateman, Milford (2013). Financing local economic development: in search of the optimal local financial system. In: ÖFSE (Hg.) Österreichische Entwicklungspolitik, Analysen ▪ Berichte ▪ Informationen mit dem Schwerpunktthema “Private Sector Development – Ein neuer Businessplan für Entwicklung?”, Wien, 43-52

Assessment 10

• Christy Chung Hevener, “Alternative Financial Vehicles: Rotating Savings and Credit Associations (ROSCAs), Federal Reserve Bank of Philadelphia, Community Affairs Department Discussion Paper, November 2006, https://www.philadelphiafed.org/-/media/frbp/assets/community-development/discussion-papers/discussionpaper-ROSCAs.pdf

Nov 9

Finance and Racism

• Alicia Robb, “Access to Capital among Young Firms, Minority-owned Firms, Women-owned Firms, and High-tech Firms,” Small Business Administration Office of Advocacy, April 2013.
• Baradaran, Mehrsa. The Color of Money, Chapter 6: The Decoy of Black Capitalism

Assessment 11

Making Money: Cotton, Slavery and Finance across the Atlantic, 1815–1837, Kathryn Boodry, http://www.eabh.info/fileadmin/pdf/conferences/2013_warsaw/foreignfinancialinstitutions_warsaw2013.pdf#page=55

Nov 16

Financialization
Excessive focus on financial markets, winner-take-all system.  Information Aggregation – market efficiency.  Financial crises.

• Greenwood, Robin and David Scharfstein, “The Growth of Finance,” Journal of Economic Perspectives—Volume 27, Number 2—Spring 2013—Pages 3–28
• Bertocco, Giancarlo and Andrea Kalajzic, “How much does finance benefit society?” PSL Quarterly Review, vol. 71 n. 287 (December 2018)
• Zingales, Luigi. “Does Finance Benefit Society,” The Journal of Finance, August 2015, Vol. 70, No. 4, pp. 1327- 1363

Assessment 12

• Eisenberg-Guyot, Jerzy; Caislin Firth; Marieka Klawitter; and Anjum Hajat, “From Payday Loans To Pawnshops: Fringe Banking, The Unbanked, And Health,” Health Affairs, Vol. 37, no. 3 (2018): 429–437, doi:10.1377/hlthaff.2017.1219
• “Consumer use of payday, auto title, and pawn loans: Insights from the Making Ends Meet Survey,” May 05, 2021, https://www.consumerfinance.gov/data-research/research-reports/consumer-use-of-payday-auto-title-and-pawn-loans-insights-making-ends-meet-survey/

Real Effects of Financial Events: Real costs of the 2007 Financial Crisis

• Douglas W. Diamond and Raghuram Rajan, “The Credit Crisis: Conjectures about Causes and Remedies,” NBER Working Paper No. 14739
• How the Great Recession Changed American Workers, Sep 10, 2018, https://knowledge.wharton.upenn.edu/article/great-recession-american-dream/ and associated Wharton podcast

Assessment 13

• Cassidy, John. “The Real Cost of the 2008 Financial Crisis,” The New Yorker, September 10, 2018, https://www.newyorker.com/magazine/2018/09/17/the-real-cost-of-the-2008-financial-crisis
• Riumallo-Herl, Carlos; Sanjay Basu; David Stuckler; Emilie Courtin and Mauricio Avendano. “Job loss, wealth and depression during the Great Recession in the USA and Europe,” International Journal of Epidemiology, 2014, 1508–1517

First draft of BerkShares case due, Friday December 3

Dec 7

Public Policy: Carbon Pricing

• Kerstine Appunn. Understanding the European Union’s Emissions Trading System (EU ETS), 20 Jul 2021.
• Calder, Alan. "Carbon and Carbon Trading," Chapter 7 in Compliance for Green IT, A Pocket Guide by IT Governance Publishing
• Hafstead, Marc. Carbon Pricing 101, Resources for the Future, https://media.rff.org/documents/Carbon_Pricing_Explainer.pdf
• Hafstead, Marc and Laurence Dunlap, Carbon Pricing 106: Effects on Employment, https://www.rff.org/publications/explainers/carbon-pricing-106-effects-employment/

Dec 14

Social Impact Investing

Prof. Kevin McQueen, The New School, will speak on the topic of Social Impact Bonds

• Social Impact Bonds: An Overview, Rockefeller Foundation
• Lund, Dorothy S., Corporate Finance for Social Good,"Columbia Law Review, June 2021, Vol. 121, No. 5, pp. 1617-1658

Sustainable Investing: https://www.economist.com/finance-and-economics/2021/09/04/sustainable-investing-faces-the-beginnings-of-a-backlash

Final written report on BerkShares case due on December 17th

Lloyd Cambridge, Entrepreneur (http://www.progressplaybook.com) will speak on Transforming Neighborhoods through Entrepreneurship

Andrew Hoffman, BerkShares: Resisting Big-Box Retailers and Creating Economic Self-Sufficiency through Local Currency and Entrepreneurship, case 1-537-103m, August 2019.

Berkshares case class discussion

• Bitcoin and the Environment
• https://www.cnbc.com/2021/07/20/bitcoin-mining-environmental-impact-new-study.html
• https://news.un.org/en/story/2021/06/1094362
• https://www.newyorker.com/news/daily-comment/why-bitcoin-is-bad-for-the-environment

Dec 22

Test 2
Based on assessments from Modules 6 to 12