Creating the Modern Financial System

Course Number 1160

Professor David Moss
Winter; Q3Q4; 3 credits
25 Sessions
Paper

Creating the Modern Financial System offers a vital perspective on finance and the financial system by exploring the historical development of key financial instruments and institutions worldwide. The premise of the course is that students will gain a richer and more intuitive understanding of modern financial markets and organizations by examining where these institutions came from and how they evolved. The course is ideal for anyone who wants to deepen his or her understanding of real-world finance.

Course Organization and Objectives

The course content covers seminal financial developments in a diverse set of countries - but with a special focus on the United States - from the 18th century to the present. Reaching across the chronological arc of the course are three broad topics: (1) financial markets and instruments, (2) financial intermediaries, and (3) financial behavior. Although nearly every case touches on all three topics, each case also has a primary focus. Whereas some cases highlight the introduction of new financial markets (such as the Dojima futures market in early modern Japan) or the creation of new instruments (such as mortgage-backed securities), others trace the emergence and maturation of critical financial institutions (including banks and insurance companies). Still others focus on the behavior of financial actors and groups, particularly in the context of financial bubbles and crashes. Because the course highlights the origins of financial markets and instruments as well as the fallout from numerous financial crises, government also looms large as an actor in many of the cases.

Throughout the course, the goal is to provide students with the broadest possible grounding in real-world finance by exposing them to some of the greatest (and, at times, most devastating) moments in modern financial history. Although the past is unlikely to repeat itself exactly, business managers who have a strong background in financial history are likely to be better prepared for the full diversity of financial innovations, shocks, and crises that they'll face in the future.

Course Administration

Course grades will be based on class participation (50%) and a final paper (50%). Throughout the semester, Professor Moss will be available to meet with students by appointment. To arrange a meeting, please contact his assistant, Joanna Beinhorn, by email (jbeinhorn@hbs.edu) or phone (5-6354). You should also feel free to contact Professor Moss directly, preferably by email (dmoss@hbs.edu).