Is Your Money Safe? Understanding Hidden Conflicts and Agency Problems in Finance

Explore the complex human dynamics of finance in this 55-minute lecture delivered by Professor Raghavendra Rau at Barnard's Inn Hall, London. Delve into the fundamental concepts of finance, from the power of promises and present value calculations to the intricate relationships between rationality and human behavior. Examine how agency problems arise in financial markets through detailed discussions of fraud, insider trading, and conflicts between stakeholders. Learn about the evolution of banking from ancient Mesopotamia to modern times, understanding how financial intermediaries control money and how trust mechanisms have developed over centuries. Gain insights into the causes and consequences of bank runs and financial crises, while looking ahead to emerging trends in digital currencies and stablecoins. The lecture concludes with a comprehensive analysis of how human complexity influences financial decision-making, offering both historical context and future perspectives on money management and financial systems.

Syllabus

00:00 // Introduction: Understanding the Human Side of Finance
02:30 // What is Finance? The Power of Promises
06:15 // The Present Value of Money: Understanding Future Returns
10:40 // Rationality vs. Reality: The Human Element in Finance
14:50 // Lies and Deception in Finance: Fraud vs. Incomplete Contracts
19:30 // The Role of Contracts: Explicit vs. Implicit Agreements
23:45 // The Cycle of Finance: Firms, Investors, and Intermediaries
28:20 // Who Controls Your Money? The Rise of Financial Intermediaries
33:10 // How Banks Create and Manage Money
37:50 // A History of Banking: From Mesopotamia to Modern Finance
42:30 // How Trust in Banking Has Evolved Over Time
47:00 // Bank Runs and Financial Crises: Causes and Consequences
51:00 // The Future of Money: Digital Currencies and Stablecoins