Learning Economics and Finance informed by the International Financial Crisis (IFC) and promoting Deep Learning

1. Learning Economics and Finance informed by the International Financial Crisis (IFC) and promoting Deep Learning Julie Gerstman and Carol Barry ATEC Conference Brisbane-13-14th July 2009

2. Biggs 3P model of Teaching and Learning

3. Encourage Deep learning • Student motivated by intrinsic factors • Influenced by presage phase of Biggs Learning Model (BLM) • Process phase BLM includes teaching/learning activities • Content and emphasis- encouraging discovery, questioning, linking • Assessment needs to be ‘constructively aligned’ • Product phase of BLM through students practising • enquiring, questioning skills that are transferred

4. Teacher’s approach to learning Outcome Objectives Teacher does not view his/her role as the conduit of all knowledge Encourages student questions Encourage students to: Explore and analyse data and information Link understanding to a range of topics and contexts Explain and defend their views Interpret relevant concepts to facilitate an understanding of the causes and context of the topic Suggest appropriate solutions Process phase- how to promote deep learning

5. Process phase- how to promote deep learning • Teaching and learning activities To provide: • A well structured knowledge base • An appropriate positive and responsive motivational context supported by the presentation of well constructed topic content including: • relevant and timely data • a range of opinions/views both written and visual- news/current affairs interviews and discussions • interconnection of topics where appropriate • A student-centred learning environment by facilitating: opportunities to: express views, demonstrate answers to the class, directly observe the business world, apply learning to new contexts by using scenarios and case studies, question conventional wisdom

6. Process phase- how to promote deep learning • Assessment of learning outcomes Assessment ‘aligns’ with learning objectives in the subject. • It includes testing a student’s ability to: • directly observe and collect data • interpret data and information • link topics and contexts by including questions from a range of topic areas • defend views based on sound understanding of the key concepts and persuasive arguments • investigate and report on current issues • Provide feedback both formally and informally by: • student self-monitoring, peer feedback, teacher feedback

7. Implementing Deep learning activities International banking - Topic in International Finance In a two hour lecture of 150 students first 70 minutes • A well-structured knowledge base of topic • An appropriate motivational context Last 40 minutes of the two hour lecture • Learner activity with interaction • Alignment of assessment with learning outcomes

8. Learner activity with interaction Many approaches may be used - this is one possibility There are five slides 9-14 with questions attached • The lecture can be divided into 5 groups each to spend 10 minutes devising an answer to the question (s) on the specified slide number. • Within the large 5 groups, students work in a group of three (stays the same each week) • One group from each of the 5 groups (made up of 10 groups x 3= 30 students ) are chosen each lecture to present their answer

9. Interpret benchmark interest rates informed by the IFC Graph 1 A What is a benchmark interest rate? B Differentiate between the meaning and level of 1 & 3 month LIBOR, prime rate & Fed target rate. C Explain the financial circumstances of each arrow Source: http://www.wsjprimerate.us/usprimerate-vs-libor-vs-fedfundstargetrate-chart.htm

10. Interpret benchmark interest rates informed by the IFC Graph 2 Explain in detail factors that were driving each of the rates between August 07-Jan 08 A Black Swan in the Money Market*John B. Taylor, Stanford University John C. Williams, Federal Reserve Bank of San Francisco, April 2, 2008

11. Interpret spreads in the IFC - A Black Swan in the Money Market* John B. Taylor, Stanford University, John C. Williams, Federal Reserve Bank of San Francisco April 2, 2008 • What is the meaning of the spread referred to in the abstract ? • Why does it increase and why is this increase so significant? • What may the TAF have been introduced? Why may it have failed?

12. Risks exposed by the IFC ‘Libor’s perilous climb’ The Wall Street Journal 5.09.2007, pp 1-2 One reason Libor is trading so high: Banks many of them in Europe have heavy commitments tied to struggling commercial –paper markets.They are reluctant to lend out dollars, and that is driving up short-term borrowing rates. Some are also worried that their counterparties in these trades, other banks might be too weak to pay back the loans’ • Explain the meaning of the three phrases in italics • Outline the meaning of the main risk that this excerpt exposes? • Suggest ways the volatility could be alleviated. Is this desirable?

13. Using the excerpts below outline a critique of LIBOR Libor Cracks Widen as Bankers Struggle With Reforms – Gavin Finch, Ben Livesey, 25.05.08, Bloomberg, London `Even when the market knew UBS was massively exposed and Lloyds wasn't, that was not reflected in Libor,'' said Antony Broadbent, an independent banking consultant and former analyst at Sanford C. Bernstein & Co. in London. Such discrepancies are creating a crisis of confidence in the London interbank offered rate published daily by the London- based BBA and taken from the contributions of UBS, Lloyds TSB and 14 other banks. Rates on corporate bonds, leveraged buyouts loans, derivatives and even U.S. mortgages are pegged to Libor. BBA (British Bankers Association) to beef up supervision of its Libor rates Reuters UK Monday 2.06.08 ‘Because banks do not currently need to prove they can trade at the yields they submit to the BBA survey, some analysts also believe the BBA may base the fixing of its Libor rates on traded ones’ 

14. Conclusions - How deep learning may be promoted through understanding the IFC • Within the example used by providing • Relevant and timely data • A range of views • Interconnection of topics provided eg commercial paper market is part of the topic international securities • A student centred learning environment through opportunities to • express views, • demonstrate answers to the class, • apply learning to new contexts, • question conventional wisdom • Feedback, both formal +/or informal may be provided after student answers