AEM 4490 - Financial Markets and Sustainability

Fall. 3 credits. Letter grades only (no audit).

Co-meets with AEM 6490.

S. Thakor, J. Tobin.

This course provides a broad overview of the financial markets, including the structure and function of these markets, the financial products that are transacted on them, and the institutions that operate within them, while addressing how financial markets are evolving in response to the challenges of sustainability. Through the use of case studies, lectures, readings, and project work, students learn how the leading actors in the financial services industry operate, what motivates them, and how they facilitate the flow of capital between those who can provide financing and those who need it. In parallel with this, the course explores how the tools of finance can be used to generate social and environmental returns in addition to financial returns.

Outcome 1: Describe the structure of the financial markets, explain the role of key market actors, and discuss the attributes of the main products and services transacted on the financial markets.

Outcome 2: Recognize and assess the negative externalities likely to result from particular financial transactions.

Outcome 3: Illustrate how financial products and services are utilized by sustainable finance practitioners to generate social and environmental co-benefits such as ecosystem conservation, poverty reduction, and improved education.

Outcome 4: Evaluate proposed sustainable finance transactions and weigh their potential to generate both financial returns and nonfinancial returns.

Outcome 5: Identify sources of unused natural or social capital and propose strategies to unlock cash flows currently locked within such sources.