A master's degree in financial economics provides a rigorous understanding of theoreticalfinance and the economic framework upon which that theory is based.[1] The degree is postgraduate, and usually incorporates a thesis or research component. Programs may be offered jointly by the business school and the economics department.
Closely related degrees include the "Master of Finance and Economics" [2] and the "Master of Economics with a specialization in Finance".[3] Recently,[when?] undergraduate degrees in the discipline are offered.[4]
The degree is gaining in recognition: Oxford's Financial Economics MSc [5] is first ranked worldwide amongst all Masters in Finance programs.[6][Notes 1]
Masters in Financial Economics are usually one to one and a half years in duration, and typically include a thesis or research component.
The nature of the degree differs by university. Generally, the degree is largely theoretical, and prepares graduates for research positions, for doctoral study in economics, or for roles in applied economics.[7][8] Some are positioned as professional degrees, preparing graduates for careers in investment banking and finance,[9][10]
and are comparable to the Master of Science in Finance, though with an increased weighting towards economic theory. In some cases, programs are substantially quantitative[11] and are largely akin to a Master of Quantitative Finance.
The curriculum is distributed between theory, applications, and modelling, with the emphasis on each differing by university and program, as outlined.
Application of the economic principles includes asset allocation and valuation, and covers specific financial instruments — such as fixed income, equities, derivatives, foreign exchange — and their portfolios. The aim here is twofold: firstly, to complement the theory; secondly, providing graduates with practical market knowledge. In the economics-focused degrees, this coverage may (will) be of secondary importance, while in the professional degrees it is a major component, and often includes separate course work in (practical) corporate finance, portfolio management and financial risk management. Macroeconomics is also usually included; often though, as opposed to covering macroeconomic theory in general, the topics are applied and / or finance related with a focus on modelling and forecasting the relationships between asset classes and their expected returns.[13]
The overlap with general finance degrees, such as a Master of Science in Finance (MSF) or an M.B.A. in finance, is further limited, particularly where the Financial Economics program is theory oriented. These degrees are focused on financial management, corporate finance and investment management, and are practice oriented with limited exposure to the underlying economic theory. However, since these courses train graduates in the use of the models developed in Financial Economics, the theory is (sometimes) covered in the context of a (basic) understanding of model assumptions. Similar comments apply to professional certifications such as the Chartered Financial Analyst (CFA) designation. The Master of Finance (M.Fin.) and M.Sc. Finance, as opposed to the MSF, have a significant theory component (as well as quantitative component),[21] and largely overlap with the Masters in Financial Economics.