AG991 International Financial Markets and Banking

Workshop 5
Workshop Questions:

Based on Hull (2009), how could the subprime crisis have been avoided?

Do credit rating agencies do a good job at assessing credit risk?

Questions for self-study1: What types of restrictions should appear in a bond indenture?

What factors would you consider in deciding whether or not to

invest in a corporate versus a government bond?

Why are well-functioning, decentralised, money markets a crucial

component of the financial system, according to Benoît Cœuré,
Member of the Executive Board of the ECB?

Background reading (optional): HB ch 5 / A ch 5 &6 / VM ch7

Required reading *:

Cœuré, B. (2012) “The importance of money markets”, speech at the Morgan Stanley 16th
Annual Global Investment seminar, Tourrettes, Provence, 16 June 2012, available at:
http://www.ecb.int/press/key/date/2012/html/sp120616.en.html
Gavras, P. (2012) ‘Ratings Game’, Finance & Development 49(1), pp. 34-37. Available at:
http://www.imf.org/external/pubs/ft/fandd/2012/03/pdf/gavras.pdf

Hull, J.C. (2009) ’The credit crunch of 2007: what went wrong? Why? What lessons can be
learned?’, Journal of Credit Risk 5(2), pp. 3-18. Available at: http://www-
2.rotman.utoronto.ca/~hull/downloadablepublications/CreditCrunch.pdf

*links to these are also on myplace

Optional sources of further information:

Dodd, R. (2018) ‘What Are Money Markets?’, Finance & Development [online], 31 May. Available at:
https://www.imf.org/external/pubs/ft/fandd/basics/58-money-markets.htm

Franke, G., and Krahnen, J.P. (2008) ‘The future of securitisation’, CFS working paper no. 2008/31, available at:
https://www.ifk-cfs.de/fileadmin/downloads/publications/wp/08_31.pdf

United Kingdom Debt Management Office (2012) UK Government Securities: a Guide to ‘Gilts’. Available at:
https://www.dmo.gov.uk/media/14971/mb13062012a.pdf

1
Guidance on a solution approach will be posted on myplace at a later date.

© Juliane Thamm – University of Strathclyde