The Role of Global Capital Markets

We begin this course by exploring the importance of the financial market environment on corporate financial decision-making. Using the example of Kellogg's, we cover the key financial markets that are reflected in the company's financial statements. We briefly introduce their key functions and features in providing flow of funds, price discovery and risk management.

This week we discuss the value added by financial markets to corporate development and economic growth. We cover the key roles of price discovery, flow of funds, efficient capital allocation, portfolio diversification and corporate governance. Introducing the influential participants in financial markets, we discuss how they contribute to the efficiency of those markets.

In week 3 we discuss the limits to economic growth imposed by imperfections and inefficiencies in global financial markets. The need for liquidity and the impact of a lack of liquidity to guarantee efficient markets has been evident in the recent financial crisis. We also discuss the necessary trust in, and integrity of financial markets.

In the final week of this course we focus our discussion on the interrelatedness of global financial markets. What happens on the New York Stock Exchange affects equity markets worldwide, and a crash in the commodity market may trigger a sharp depreciation in a currency on the foreign exchange market.