Run by Bangor Business School - (Changsha)

10.000 Credits or 5.000 ECTS Credits

Semester 1 & 2

Organiser: Ms Wendy Ashurst

The module provides an in-depth coverage of Behavioural Finance, which replaces the "rationality" assumption with behavioural biases that have been documented by psychologists. This approach will be applied to explain puzzles in asset pricing and corporate finance, and to underpin practical applications.

The module provides an introduction to Behavioural Finance as an alternative approach to explaining investors' decisions and behaviour, and financial market outcomes, based on psychological theory and evidence. This includes consideration of the Efficient Markets Hypothesis, market inefficiency and specific empirical anomalies; as well as Expected Utility Theory and Allais’ and Rabin’s critiques. Alternative perspectives of financial decision making, such as Prospect Theory, are developed, based on psychological research and evidence, and are used to underpin the concept of investor sentiment. Behavioural explanations for prominent asset pricing anomalies as explored, as well as frictions that promote market inefficiency, such as arbitrage constraints. The module also briefly covers applications of Behavioural theories to Corporate Finance decisions.

C- to C+

C- to C+ (50-59%): Much of the relevant information and skills mostly accurately deployed. Adequate grasp of theoretical/conceptual/practical elements. Fair integration of theory/practice/information in the pursuit of the assessed work's objectives. Some evidence of the use of creative and reflective skills.

threshold

D- to D+ (40-49%): No major omissions or inaccuracies in the deployment of information/skills. Some grasp of theoretical/conceptual/practical elements. Integration of theory/practice/information present intermittently in pursuit of the assessed work's objectives.

good

B- to B+ (60-69%): Very good performance Most of the relevant information accurately deployed. Good grasp of theoretical/conceptual/practical elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Evidence of the use of creative and reflective skills.

excellent

A- to A+ (70%+): Outstanding Performance. The relevant information accurately deployed. Excellent grasp of theoretical/conceptual/practice elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Strong evidence of the use of creative and reflective skills.

1. Critically evaluate the competing approach of behavioural finance.

2. Apply the behavioural finance paradigm in particular cases.

3. Understand and elucidate the relative strengths and weaknesses of the efficient markets hypothesis.

Type	Name	Description	Weight
	Individual Written Report		30.00
	Formal Examination 1.5 hours		70.00

		Hours
Lecture	Formal Examination 1.5 hours	20
Private study	Private study will include time reviewing lecture materials and recommended reading, completing assignments, and revising for the exam.	78
Practical classes and workshops	Two 1-hour computer lab sessions.	2

• Literacy - Proficiency in reading and writing through a variety of media
• Computer Literacy - Proficiency in using a varied range of computer software
• Exploring - Able to investigate, research and consider alternatives
• Information retrieval - Able to access different and multiple sources of information
• Critical analysis & Problem Solving - Able to deconstruct and analyse problems or complex situations. To find solutions to problems through analyses and exploration of all possibilities using appropriate methods, rescources and creativity.
• Argument - Able to put forward, debate and justify an opinion or a course of action, with an individual or in a wider group setting

Compulsory in courses:

• N405: BSc Accounting & Finance (Bangor College, China) year 3 (BSC/AFBC)
• N392: BSc Banking & Finance (Bangor College, China) year 3 (BSC/BFINBC)