Teaching Finance in the Post-GFC Environment: Quomodo hic habetur, et Quo hinc?

Abstract

Despite criticism in the wake of the GFC, history shows that theory and curricula adapt to rectify any disconnects between theory, curricula, and practice. Finance theory unquestionably has antecedents in economics, accounting, legal theory, and psychology. Some theoretical developments-including the moral hazard consequences of limited liability-have yet to filter through to many texts and curricula, which also omit explanations of uncertainty; incomplete and (sub)optimal contracting; contagion; and behavioural finance. Student learning outcomes could be enhanced if universities, perhaps in a final year, cross-disciplinary "capstone" course, empowered students to understand the financial documentation evidencing sophisticated transactions; map relevant cash flows and wealth transfers; and recognise Ponzi schemes, the ethics of stakeholder wealth transfers, the conditions for contagion, and incentives for adverse selection and moral hazard in practice.

Including ethics in banking and finance programs: teaching “we shouldn’t win at any cost”

“…Finance curricula in higher education have been criticised post GFC by the media (Anteby, 2013). They were criticised for over-emphasising theories that portray rational behaviour, when in fact the reality was significantly different (Copp, 2012).…”

“…Much of the literature relates to management and business disciplines in general, while the need for ethics education and integration into banking and finance programmes has been given less attention. Although post GFC there has been focus on the need for ethics education in the finance discipline (Graafland and Ven, 2011;Copp, 2012;Wong and Copp, 2012), incorporation of ethics education into finance curricula is yet to be evaluated.…”

“…The moral failure identified in financial institutions following the GFC motivates us to research ethics education in business schools. While post GFC there is significant growth in the scholarly research related to ethics in banking and finance (Bernardi et al, 2008;Graafland and Ven, 2011;Copp, 2012), there is a paucity of literature that focuses on how ethics education is incorporated into curricula. This paper addresses whether ethics education features, how ethics education is incorporated into curricula and what topics are included in ethics courses.…”