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Financial Markets and Institutions, 9th edition

Published by Pearson (January 3, 2017) © 2018

  • Frederic S Mishkin Columbia University
  • Stanley Eakins East Carolina University

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For courses in financial markets.

Real-world applications help students navigate the shifting financial landscape
Financial Markets and Institutions takes a practical approach to the changing landscape of financial markets and institutions. Best-selling authors Frederic S. Mishkin and Stanley G. Eakins use core principles to introduce students to topics, then examine these models with real-world scenarios. Empirical applications of themes help students develop essential critical-thinking and problem-solving skills, preparing them for future careers in business and finance. The 9th Edition combines the latest, most relevant information and policies with the authors’ hallmark pedagogy to give instructors a refined tool to improve the learning experience.

Financial Markets and Institutions is also available via Revelâ„¢, an interactive learning environment that enables students to read, practice, and study in one continuous experience. Learn more.

Organize learning with a unifying analytic framework

  • A unifying analytic framework uses a few basic principles to organize students’ thinking. These principles include:
    • Asymmetric information (agency) problems
    • Conflicts of interest
    • Transaction costs
    • Supply and demand
    • Asset market equilibrium
    • Efficient markets
Help students transition from classroom to career with real-life business scenarios
  • Cases demonstrate how the analysis in the book can explain many important real-world situations. A special set of cases called Case: Reading the Wall Street Journal show students how to read daily columns in this leading financial newspaper.
  • The Practicing Manager special cases introduce students to real-world problems that financial institution managers have to solve.
  • Following the Financial News boxes introduce students to relevant news articles and data often reported daily in financial news sources and explain how to read them.
  • Inside the Fed boxes give students a feel for what is important in the operation and structure of the Federal Reserve System, and delve into major changes to monetary policy and lending following the financial crisis.
  • Global boxes include interesting material with an international focus.
  • E-Finance boxes relate how changes in technology have affected financial markets and institutions.
  • Conflicts of Interest boxes outline conflicts of interest in different financial service industries.
  • Mini-Case boxes highlight dramatic historical episodes, including a special focus on financial crises and trading scandals. These boxes also apply the theory to the data.

Emphasize critical thinking with key features

  • Chapter Previews at the beginning of each chapter give students an overview of the chapter, explaining why specific topics are important and how they relate to other topics in the book.
  • Numerical Examples guide students through solutions to financial problems using formulas, timelines, and calculator keystrokes.
  • Summary Tables are useful study aids for reviewing material.
  • Key Statements highlight in boldface type important points so that students can easily find them for later reference.
  • Graphs with over 60 captions, help students understand the interrelationship of the variables plotted and the principles of analysis.
  • Summaries at the end of each chapter list the chapter’s main points.
  • Key Terms are important words or phrases set in boldface type when defined for the first time and are listed at the end of each chapter.
  • End-of-Chapter Questions help students learn the subject matter by applying economic concepts, and feature a special class of questions that students find particularly relevant, titled Predicting the Future.
  • 250+ End-of-Chapter Quantitative Problems help students develop their quantitative skills.
  • Web Exercises encourage students to collect information from online sources or use online resources to enhance their learning experience.
  • Web Sources provide the URL to data used in the many tables and charts.
  • Marginal Web References indicate websites that provide information or data that supplement the text material.
  • A Glossary at the back of the book defines all of the key terms.
  • Full Solutions to the Questions and Quantitative Problems appear in the Instructor’s Manual and on the Instructor’s Resource Center online at pearsonhighered.com/irc. Professors are free to share the solutions with their students as they see fit.

New in the 9th edition

  • Updated - Data and major material throughout the text now reflects 2016 statistics and events.
  • New - Material on financial markets and institutions now includes:
    • A new section on hedge funds
    • An updated Mini-Case box on negative interest rates in the United States, Europe, and Japan
    • An updated case on explaining low interest rates in Europe, Japan, and the United States
    • A new Mini-Case box on the tyranny of collateral
    • A new section describing securitization and the shadow banking system
  • New - Material on monetary policy reflects the major changes in the way central banks conduct monetary policy since the global financial crisis. New material includes:
    • An updated Inside the Fed box on how Janet Yellen’s style differs from former Federal Reserve chairs
    • An updated Inside the Fed box on the evolution of the Fed’s communication strategy
    • A new section on how Federal Reserve actions affect reserves in the banking system
    • An updated section on forward guidance
    • A new section on the policy tool, negative interest rates on bank deposits at central banks
  • New - Appendices on the web at www.pearsonhighered.com/mishkin_eakins allows for the addition and retention of material by posting the content online. Instructors can either use these appendices in class to supplement the material in the textbook or recommend them to students who want to expand their knowledge of the financial markets and institutions field.
Financial Markets and Institutions is also available via Revelâ„¢, an interactive learning environment that enables students to read, practice, and study in one continuous experience. Learn more.

Financial Markets and Institutions is also available via Revelâ„¢, an interactive learning environment that enables students to read, practice, and study in one continuous experience. Learn more.

New in the 9th edition

  • Data and major material throughout the text now reflects 2016 statistics and events.
  • Material on financial markets and institutions now includes:
    • A new section on hedge funds
    • An updated Mini-Case box on negative interest rates in the United States, Europe, and Japan
    • An updated case on explaining low interest rates in Europe, Japan, and the United States
    • A new Mini-Case box on the tyranny of collateral
    • A new section describing securitization and the shadow banking system
  • Material on monetary policy reflects the major changes in the way central banks conduct monetary policy since the global financial crisis. New material includes:
    • An updated Inside the Fed box on how Janet Yellen’s style differs from former Federal Reserve chairs
    • An updated Inside the Fed box on the evolution of the Fed’s communication strategy
    • A new section on how Federal Reserve actions affect reserves in the banking system
    • An updated section on forward guidance
    • A new section on the policy tool, negative interest rates on bank deposits at central banks
  • Appendices on the web at www.pearsonhighered.com/mishkin_eakins allows for the addition and retention of material by posting the content online. Instructors can either use these appendices in class to supplement the material in the textbook or recommend them to students who want to expand their knowledge of the financial markets and institutions field.

Brief Contents

PART I: INTRODUCTION

  1. Why Study Financial Markets and Institutions?
  2. Overview of the Financial System

PART II: FUNDAMENTALS OF FINANCIAL MARKETS

  1. What Do Interest Rates Mean and What Is Their Role in Valuation?
  2. Why Do Interest Rates Change?
  3. How Do Risk and Term Structure Affect Interest Rates?
  4. Are Financial Markets Efficient?

PART III: FUNDAMENTALS OF FINANCIAL INSTITUTIONS

  1. Why Do Financial Institutions Exist?
  2. Why Do Financial Crises Occur and Why Are They So Damaging to the Economy?

PART IV: CENTRAL BANKING AND THE CONDUCT OF MONETARY POLICY

  1. Central Banks and the Federal Reserve System
  2. Conduct of Monetary Policy

PART V: FINANCIAL MARKETS

  1. The Money Markets
  2. The Bond Market
  3. The Stock Market
  4. The Mortgage Markets
  5. The Foreign Exchange Market
    • Appendix: The Interest Parity Condition
  6. The International Financial System

PART VI: THE FINANCIAL INSTITUTIONS INDUSTRY

  1. Banking and the Management of Financial Institutions
  2. Financial Regulation
  3. Banking Industry: Structure and Competition
  4. The Mutual Fund Industry
  5. Insurance Companies and Pension Funds
  6. Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

PART VII: THE MANAGEMENT OF FINANCIAL INSTITUTIONS

  1. Risk Management in Financial Institutions
  2. Hedging with Financial Derivatives

CONTENTS ON THE WEB

  1. Financial Crises in Emerging Market Economies
  2. Savings Associations and Credit Unions
  3. Finance Companies

Frederic S. Mishkin is the Alfred Lerner Professor of Banking and Financial Institutions at the Graduate School of Business, Columbia University. From September 2006 to August 2008, he was a member (governor) of the Board of Governors of the Federal Reserve System.

He is also a research associate at the National Bureau of Economic Research and past president of the Eastern Economics Association. Since receiving his PhD from the Massachusetts Institute of Technology in 1976, he has taught at the University of Chicago, Northwestern University, Princeton University, and Columbia University. He has also received an honorary professorship from the People’s (Renmin) University of China. From 1994 to 1997, he was executive vice president and director of research at the Federal Reserve Bank of New York and an associate economist of the Federal Open Market Committee of the Federal Reserve System.

Mishkin’s research focuses on monetary policy and its impact on financial markets and the aggregate economy. He is the author of more than twenty books, including Macroeconomics: Policy and Practice, 2nd Edition (Pearson, 2015); The Economics of Money, Banking and Financial Markets, 10th Edition (Pearson, 2013); Monetary Policy Strategy (MIT Press, 2007); The Next Great Globalization: How Disadvantaged Nations Can Harness Their Financial Systems to Get Rich (Princeton University Press, 2006); Inflation Targeting: Lessons from the International Experience (Princeton University Press, 1999); Money, Interest Rates, and Inflation (Edward Elgar, 1993); and A Rational Expectations Approach to Macroeconometrics: Testing Policy Ineffectiveness and Efficient Markets Models (University of Chicago Press, 1983). In addition, he has published more than 200 articles in such journals as American Economic Review, Journal of Political Economy, Econometrica, Quarterly Journal of Economics, Journal of Finance, Journal of Applied Econometrics, Journal of Economic Perspectives, and Journal of Money Credit and Banking.

Professor Mishkin has served on the editorial board of the American Economic Review and has been an associate editor at the Journal of Business and Economic Statistics, Journal of Applied Econometrics, Journal of Economic Perspectives, Journal of Money, Credit and Banking, and Journal of International Money and Finance. He also served as the editor of the Federal Reserve Bank of New York’s Economic Policy Review. He is currently an associate editor (member of the editorial board) at five academic journals, including International Finance; Finance India; Emerging Markets, Finance, and Trade; Review of Development Finance; and Borsa Economic Review. He has been a consultant to the Board of Governors of the Federal Reserve System, the World Bank and the International Monetary Fund, as well as to many central banks throughout the world. He was also a member of the International Advisory Board to the Financial Supervisory Service of South Korea and an adviser to the Institute for Monetary and Economic Research at the Bank of Korea. Mishkin has also served as a senior fellow at the Federal Deposit Insurance Corporation’s Center for Banking Research, and as an academic consultant to and member of the Economic Advisory Panel of the Federal Reserve Bank of New York.

Stanley G. Eakins has notable experience as a financial practitioner, serving as vice president and comptroller at the First National Bank of Fairbanks and as a commercial and real estate loan officer. A founder of the Denali Title and Escrow Agency, a title insurance company in Fairbanks, Alaska, he also ran the operations side of a bank and was the chief finance officer for a multimillion-dollar construction and development company.

Professor Eakins received his PhD from Arizona State University. He is the Dean for the College of Business at East Carolina University. His research is focused primarily on the role of institutions in corporate control and how they influence investment practices. He is also interested in integrating multimedia tools into the learning environment and has received grants from East Carolina University in support of this work.

A contributor to journals such as the Quarterly Journal of Business and Economics, the Journal of Financial Research, and the International Review of Financial Analysis, Eakins is also the author of Corporate Finance Online (CFO) (Pearson, 2014), a multimedia online text designed from the ground up for electronic delivery.

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