Teaching finance after crisis..
After deliberating on econ teaching, Jakob de Haan and Dirk Schoenmaker introspect on finance teaching:
The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European banking union. It argues for the inclusion of these topics in curricula for the next generation of finance students.
It misses the most important subject – financial history. I mean if financial history is taught, all these supposedly new additions will be taken care of. For instance,
- Financial market failures have existed for ages and long historical analysis actually talks more of crisis than growth episodes. This automatically enforces to students that financial crisis are pretty much part and parcel of financial cycle.
- Then things like structural changes of financial system is a fancy term for whether to raise money via banks or markets. Again, taking a historical view gives students much better appreciation of how financial systems have evolved over the years. It always has been a fight with one form winning over other only to lose out later.
- Macro-prudential too may look like a new term but is just an old wine in a new name.
- Historical analysis again forces you to look at system as a whole not just standalone firms. On Europe, well it is all about history again.
All financial teaching should start from laying historical foundations of finance rather than the hyped financial foundations. It could start with global history than focusing on country specific historical foundations. Trade and Finance are the oldest sub-topics of economics. So there is plenty of material out there. Just that we have taken an easier path by teaching students the same ideas across the world..