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In contrast to other readers in the Financial Markets and Institutions field, this Reader is updated annually. Sixteen of the forty-five articles are new to this latest edition of the Reader. Eighteen of the articles were published in 2008 or 2009. These include articles on the potential problems posed by growing government deficits and debt, the impact of economic news on financial markets, actions the Fed and other central banks have taken to restore financial stability, monetary policy and asset prices, dollarization, sovereign wealth funds, cyclical behavior of bank credit standards, the effect of a credit crunch on small business lending, the too big to fail policy, bank supervision and disclosure, and regulatory reform. Many of these articles relate to the financial crisis that started in 2007–its causes, the Fed’s policy responses, and the long-run impacts on the economy, inflation, financial institutions, and the Fed’s independence. No other reader in the field is as current, and this continues to be the case with the appearance of a new edition of the Reader every year.
A New Way to Teach Financial Markets and Institutions
Financial Markets and Institutions develops a unifying analytic framework to organize students' thinking about financial markets and institutions so that they can make sense of, rather than be confused by, all the facts about our financial system. The confirmed strength of this approach, in contrast to the approach used in other textbooks that focus on a set of facts about financial institutions, is that it will not go out of date. Because this approach stresses lasting economic concepts, it allows instructors to discuss the latest developments . As part of this approach to teaching, instructors will want to use current articles in class to illustrate the economic forces that are driving changes in financial markets and institutions. This Reader is designed to make it easier for instructors to do this and keep their teaching current.
The numerous, current readings that appear annually in this and future editions of the Reader provide a whole new way of teaching financial markets and institutions. This new approach makes it less likely that students will memorize a mass of facts that will be forgotten after the final exam and that soon become obsolete because of the rapid pace of financial innovation. Instead, they will have an understanding of the dynamism of our financial markets and institutions and will see that what they have learned applies to current developments in financial markets, illustrating the relevance of their course work.
Pedagogical Aids
Each part begins with a list of readings keyed to the textbook chapters to help instructors organize their courses. Instructors may wish to read through all the part introductions as they plan their courses to become aware of the various options for matching readings with the text chapters they assign. For example, Reading 1 on government deficits and debt can be used at the beginning of the semester as an introduction to many topics that will be covered in the course, but it also could be saved for use when discussing bond markets. Also, many readings for Part 5 can be used with more than one chapter; after looking them over, you can determine where they best fit your syllabus.
Each reading is prefaced by a brief summary of its content, followed by a number of discussion questions which encourage students to think about how the reading relates to material in the text. Instructors may find these questions useful for class discussions of the reading or as written assignments in problem sets.
James W. Eaton
Department of Economics and Business
Bridgewater College
Bridgewater, Virginia 22812
jeaton@bridgewater.edu
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