Lecture 2 - Finance

Hi there. In this I'm going to be talking about financial markets, institutions and intermediaries in the context of debate. Before that, a couple of caveats. First, I don't work in or study finance. So, as always, take this with a grain of salt. Second, and more importantly, the purpose of this presentation is not per se to outline a

set of principles relating to finance that are immediately useful for debate. Rather, I've written this presentation with the aim of building an understanding of how the financial system works and more importantly why the financial system works the way it does. The aim of this presentation then is not to provide you with facts that

are immediately deployable in debates about finance. Rather, it's intended to help you understand the financial system in a way that's more intuition-based, which hopefully makes it easier to understand, for example, how to make arguments about banks or how to debate the merits of regulation. Third, this presentation will be rather long and so

it's probably best to watch this in parts. The way I'd personally recommend is starting with the section on commercial banking and understanding the major risks involved in commercial banking, the model that commercial banks adopt, and then shifting more towards capital markets and intermediaries. And if there are particular sections that you understand less well than others,

you probably should spend more time thinking about or reading about or just working through those topics. The other thing I'll add in terms of a caveat is that I'm not going to talk that much about sovereign finance. I have a small section on debt restructuring and vulture funds and a bit on sovereign