Financial Economics

About the major

The major in Financial Economics is focused on the economic models used in finance, and the econometric skills needed to apply these models to financial markets and other economic data. This is an area of high employer demand in a range of diverse fields. The major can also be taken in conjunction with other majors offered by the School of Economics (Economics/Econometrics) or the Business School (such as Finance/Financial Mathematics), as long as subjects at the senior level are not double counted towards two different majors.

Requirements for completion

A major in Financial Economics requires 48 credit points from the Unit of Study table including:
(i) 12 credit points of 1000-level units of study (ECON1001, ECMT1010)
(ii) 12 credit points of 2000-level core units of study including ECMT2130
(iii) Alternative unit (ECOS2040) for core unit of study (ECOS2001/ECOS2901) if it has already been completed for a different major/minor/program
(iv) 6 credit points of 3000-level core units of study (ECOS3022)
(v) 18 credit points of 3000-level selective units of study including 6 credit points of Interdisciplinary Project units of study.

A minor in Financial Economics requires 36 credit points from the Unit of Study table including:
(i) 12 credit points of 1000-level units of study (ECON1001, ECMT1010)
(ii) 12 credit points of 2000-level core units of study including ECMT2130
(iii) Alternative unit (ECOS2040) for core unit of study (ECOS2001/ECOS2901) if it has already been completed for a different major/minor/program
(iv) 6 credit points of 3000-level core units of study (ECOS3022)
(v) 6 credit points of 3000-level selective units of study.

First year

ECON1001 Introductory Microeconomics introduces the key microeconomic tools that will be used throughout the major, including the concepts of scarcity, opportunity cost, marginal analysis, efficiency and market failure. Analysing financial and economic data is a crucial component of the Financial Economics major. Students will be introduced to core statistical concepts in ECMT1010.

Second year

In their second year, students learn the microeconomic and macroeconomic theoretical tools required for the major’s 3000-level compulsory and selective units. The emphasis is on the relationship between these theories (both micro and macro) and financial markets.

In ECMT2130 students use econometric models to analyse financial data and markets. This develops the skills that enable a student to be able to critically analyse financial economic data using appropriate economic models.

Third year

In their third year, students use the skills they have learnt in the four preceding theory units to deepen their understanding of how financial markets work, how economic factors such as asymmetric information and incomplete contracts help shape the form of debt contracts, and to better understand the role of intermediaries. The compulsory 3000-level financial economics unit, ECOS3022, is a high-level theoretical unit that will develop critical thinking in a disciplinary context. The culminating unit for the major is the combined interdisciplinary project unit. This unit will require students to demonstrate that they can choose the appropriate model to critically analyse and to provide advice.

Contact/further information

School of Economics
sydney.edu.au/arts/economics
Room 370, Merewether H04
Email:

Pathways through the major and minor

Financial Economics pathway to major

Financial Economics pathway to minor

Learning Outcomes

1. Demonstrate an understanding of the basic principles of microeconomics and macroeconomics, such as the clearing of markets, the impact of market structure on price and welfare outcomes and the term structure of interest rates, and their application to financial markets.
2. Analyse and develop models that explain pricing in financial markets and the use of particular financial instruments using an economic framework.
3. Critically analyse financial economic data using appropriate economic models.
4. Critically evaluate economic models of financial markets and be able to assess their applicability to particular markets.
5. Demonstrate understanding of the foundations for market outcomes in financial markets, and associated trading rules and results such as the Capital Asset Pricing Model.
6. Clearly communicate the results and implications of informed and sophisticated economic and econometric analysis as applied to financial markets.
7. Work independently and collaboratively to construct and defend a valid argument as it applies to financial markets.
8. Apply economic thinking to work and research in other relevant disciplinary communities.