Managing the Financial Firm
Course Number 1509
Professor David Scharfstein
Winter; Q3Q4; 3 credits
In MFF, we examine the challenges and opportunities faced by financial industry managers and entrepreneurs in the "post-crisis" world. We seek to understand of how they can effectively navigate these challenges and take advantage of new business opportunities that are emerging in the changing environment.
Financial firms play a central role in the proper functioning and health of the global economy, providing capital for growth, the "plumbing" to facilitate liquidity and transactions, and the tools to manage risk. The scope of activities is substantial, with financial firms offering a variety of products and services, including credit, investments, risk management tools, advice - to a variety of clients around world - institutional investors, businesses, individuals and governments. These firms assume an array of organizational forms to compete in the marketplace, evolving over time as the marketplace and regulatory regimes change; some are highly focused and some have a substantial breadth of activities. The financial industry continues to undergo unprecedented change as a result of the financial crisis, with business practices and models of many firms and whole sectors having been called into question, and the relationships among the financial industry, the "real economy" and government under fundamental reexamination.
In the first module we examine the disruption the industry is undergoing, and its implications for the environment managers will operate within. The second module takes a closer look at the business of providing financial services including asset management, household credit, corporate finance, and insurance. The third module examines the challenges of managing financial firms, including internal organizational challenges and broader strategic challenges. We will examine firms in many sectors of the industry; some of the companies are large and well known and others are small and entrepreneurial. Because regulation is such an important consideration in this industry, we will also sometimes take the perspective of regulators. We will have a number of guest speakers. The cases will be supplemented by readings for supporting theory and to explore relevant current events.