15:59 PM

Having trouble in finance classes? Movies might help

Teaching a potentially abstract business discipline like finance presents a constant challenge to connect complicated "real world" finance concepts to classroom discussions.

University of Houston-Clear Lake's Associate Professor of Finance Tim Michael and his writing partner, Professor of Finance at Washington and Lee University George Kester, found that they could offer students a frame of reference that helped them understand and appreciate the relevance of certain topics. By using movies or film clips, instructors can bring it all to life in ways that aren't easy to achieve in a lecture or assignment.

"I was always interested in movies," Michael said. "I had the idea to use TV or film to get certain finance concepts across. A popular movie when I was in school was 'Trading Places,' which is politically incorrect in many ways now, but actually gives a good glimpse into futures trading."

Another film in which a bank plays a key role is the Christmas classic, "It's a Wonderful Life."

"There's an evil banker and a good guy, and the movie is about what happens when the banker takes over the town," he said. "George Kester and I were working on a paper about supplemental books to illustrate concepts in finance courses, and we thought of 'Atlas Shrugged,' by Ayn Rand, and wondered about the movie version of that book."

The two began working on a movie list, ultimately writing up about 30 films that were commonly used or recommended to students to help them understand the context of financial decisions and the issues facing decision makers.

"The Chartered Financial Analyst (CFA) Institute approached us after seeing a paper we'd presented about this at an academic conference and asked whether we could relate 10 of the most popular movies to the material in the CFA Institute's own study program," he said. "In December 2020, they sent out our 'Top 10 Finance Films' in their newsletter, which I'm told reaches about a half-million people."

In most cases, Michael said, a "Rotten Tomatoes" rating for movies was also included to show how popular they'd been for viewers and movie critics, since their original survey only asked college professors.

"The best use for these films is to expose people to the day-to-day environment of finance," he said. "They're exciting and compelling because they're movies, but they're not always completely accurate. It's important to get students out of the classroom and out of the books and see what really can happen, sometimes making them feel the emotions of the participants and connect feelings with lessons learned in business."

In addition to "Trading Places," Michael said his list included "The Big Short," a story about hedge funds that tried to make money in the collapse of the subprime industry of 2008; "Other People's Money," which explores both sides of the shareholder wealth objective in finance; and "Barbarians at the Gate," the story of the leveraged buyout of RJR Nabisco, centering on the company CEO's attempt to buy out the rest of Nabisco's stakeholders.

Michael said the results of their survey should be of interest to others who are looking for good movies themselves, or to use in the classroom. "These movies help bring finance alive in ways that journal articles, textbooks and lectures can't, so students' understanding and application of our discipline is enhanced," he said.

For more information about UHCL's Department of Decision Sciences, Economics, Finance and Marketing, go online.