Structure of the MBF program

The goal of this specialised program is to form experts who are able to base their analysis of financial problems and developments within a sound theoretical and quantitative framework. Their analysis should also enable them to work out or to adapt existing (company) strategies.

Thorough understanding of the complex relationships and dynamics of financial markets and institutions requires insight in many disciplines. Knowledge about the organisation of financial markets and the mechanics of the assets traded is not sufficient, if it is not supplemented by awareness of macroeconomic and monetary concepts. Moreover, the quantitative nature of finance also requires a sound command of econometrics and data processing skills. It is precisely the need of the financial community for people who are able to combine these economic, financial and quantitative skills that led the Faculty of Economics and Business Administration at Ghent University to organise the Master in Banking and Finance. This Master draws heavily upon the expertise of the young team of teachers and researchers from the Department of Financial Economics. This department groups sub-fields such as monetary economics, banking, microeconomics of financial markets, investment analysis, financial econometrics, and risk management.

As outlined in the mission statement, the MBF’s objective is to equip the students with advanced analytical and quantitative skills in the fields of banking and finance. Next to the emphasis on methodology and econometric techniques, other unique features of the program are its focus on risk management and the link with the macroeconomic environment.

These features are translated in the design of the program, in the timing of the courses during the academic year and in the mix of teaching methods and learning techniques in the various courses.

The decision on the contents of the courses is partly driven by progress in the academic literature and partly inspired by the needs of finance and banking professionals in post-crisis modern financial services firms.

Figure 2 gives an overview of the program and the links between the course clusters

When looking at the figures, one will notice that the main areas (banking and finance) have been placed at the centre. The flagship banking course is Management of Financial Institutions’ during which students analyze individual banks and acquire up-to-date bank management capabilities. The corresponding main finance course is ‘Advanced Investment Analysis’ during which students are actively exposed to recent academic research in finance. In the banking section, there is also a second semester course on ‘International Banking’ in order to cover international macro banking features such as deposit insurance, financial crisis management, etc. In the finance section, the second semester course ‘Advanced Asset Allocation’ familiarizes the students with advanced techniques for portfolio performance and risk management.

Since financial actors are notoriously exposed to macroeconomic developments, the program accommodates this feature by supplying two supporting macro courses. ‘Economics of Financial Markets’ focuses on the interaction between macroeconomic policies (monetary, budgetary, exchange rate) and a broad range of financial markets. ‘Monetary Economics’ provides a solid background on the functioning of central banks (the ECB in particular), conducting a monetary policy and how to transmit this to financial markets and the real economy. As the arrows in the figure indicate, insights from the macroeconomic courses are actively used in all banking and finance courses, e.g. by integrating macro considerations in cases or papers.

A similar rationale explains the presence of two methodological courses (top right in the figure). Since we focus on quantitative skills, there is a ‘Financial Econometrics’ course in which statistical techniques relevant for finance are dealt with. In addition, there is a course ‘Topics in Empirical Research in Finance’ which spans the entire academic year during which external finance professionals are invited to explain real-world applications of sophisticated econometric techniques in banking, asset management and risk management. This offers the students hands-on exposure to quantitative techniques, but also provides insight into the limitations of theoretical frameworks and econometric techniques in real-world applications.

In the bottom part of the figure, we have included the risk dimension of the program. Risk management has increasingly become a core competence in the post-crisis financial industry. The first-semester ‘Financial Risk Management course’ teaches the students how modern risk management instruments (especially derivatives) are priced and used. Some of these insights are also relevant for the banking and finance courses.

There is also a course ‘Topics in Advanced Corporate Finance’ since certain applications in finance require a solid knowledge of corporate financing issues, such as dividend policies or mergers and acquisitions. In fact, ‘Topics in Advanced Corporate Finance’ and ‘Monetary Economics’ are the two elective courses in the program; the students have to choose either one. Students with prior exposure to corporate finance are required to take ‘Monetary Economics’ in order to strengthen their macroeconomic background, while students with a more general economic background are required to upgrade their corporate finance skills.

Finally, the ‘Ethics and Governance in Banking and Finance’ course is intended to investigate the effects of alternative governance mechanisms on the profit and risk profile of financial actors. Since the financial crisis, both regulators and supervisors have increased the legal and compliance requirements for financial institutions. But it is clear that regulation alone cannot guarantee socially beneficial behavior; governance and ethical issues are therefore relevant topics in an MBF program.