Program Introduction and Objectives

Embark on a transformative journey with the MPhil Economics and Finance program at PIDE, meticulously crafted to cultivate the next wave of visionary financial leaders and pioneering entrepreneurs. In a world still reeling from an unprecedented financial crisis, with Pakistan navigating its lingering effects, the need for profound expertise has never been more critical. Situated in Islamabad, the nation’s networked hub for listed firms following Karachi, PIDE’s program rises to meet this challenge head-on. We offer a unique, unified platform to delve into the intricate economic and financial dynamics that shape individual and corporate actions. Our commitment extends beyond the study of business itself, exploring its vital connections to the broader global landscape. This rigorous program will empower you with the analytical prowess and economic insight necessary to confront complex financial challenges, ultimately mitigating the risk of business failures and fostering a more resilient economic future.

Eligibility Criteria

BBA(4 years), B.S (4 years), M.A/MSc (2 years) in Economics, Finance, M.Com or any other relevant subject with at least 2^nd Division, 2.5/4.00 CGPA or B Grade.

The candidates with research publication and relevant job experience in the applied fields of Economics and Finance are highly encouraged to apply.

Students awaiting results may also apply

Program Structure

Total Credit Hours: 36 Credit Hours
Course Work: 24 Credit Hours
Thesis: 12 Credit Hours
Core Courses: 4
Elective Courses: 4
Non-Credit Core Course: 1

Duration: 2 years (with the provision of one-year extension)

Program Structure

Current List of Elective Courses   

The department wants to bring following changes in the current list of EAF courses.

Course Descriptions:

Economic Theory

This course offers a rigorous overview of core economic theory, integrating both microeconomic and macroeconomic perspectives to build a strong analytical foundation for advanced study and research. Aimed at MPhil students in Economics and Finance, the course revisits key concepts in consumer and producer theory, market structures, general equilibrium, and welfare economics on the micro side, while also covering macroeconomic frameworks including national income determination, fiscal and monetary policy, economic growth, and business cycle analysis.

Through theoretical models and real-world applications, students will develop the ability to critically evaluate economic behavior at both individual and aggregate levels. The course emphasizes logical reasoning, model-based thinking, and the application of economic theory to contemporary policy and financial issues, serving as a vital stepping stone for more specialized research in economics and finance.

Financial Theory

The aim of this course to develop understanding about the role of financial markets and the economy, depository institutes, investment banks, insurance companies, pension funds and investment companies, derivative market: futures and options and instruments, equity markets and instruments, debt markets and instruments, foreign exchange markets, global financial markets. The subject will cover all the major theories of investment and corporate finance includes efficient market theory, asset pricing theory, Investment in capital market, portfolio theory (portfolio selection and portfolio analysis), dividend decisions, capital structure decisions, cost of capital and taxation issue.

Research Methodology & Academic Writing

Introduction to research in applied economics. The Role of Business Research. Research process and stages. Developing Research Proposals. Research framework and designs. Literature review and Referencing. Qualitative Research Techniques: Ethnography, Narrative Inquiry, Action research, Case study, Grounded theory, Content analysis. Primary data, Secondary data Quantitative Research Techniques: Descriptive, Experimental, Survey. Measurement and scaling. Data collection tools, Interviews, Questionnaire, Observation, Document analysis, Sampling and its types. Reliability and Validity .Ethical issues in research.

Strategic Decision making and control

This course equips MPhil students with advanced knowledge and analytical tools to support strategic planning, performance management, and control in economic and financial contexts. It focuses on integrating financial and non-financial information to inform strategic decisions and achieve organizational objectives.

Key areas of study include strategic analysis, risk assessment, performance measurement, budgeting and forecasting, cost management, corporate governance, and internal control systems. Students will learn to evaluate strategic options using both quantitative and qualitative methods, assess organizational performance, and design effective control mechanisms that support long-term value creation. By the end of the course, students will be able to apply strategic decision-making models in complex economic and financial scenarios, ensuring alignment with ethical standards, regulatory frameworks, and sustainable business practices.

Advance Microeconomic Theory

This course provides an in-depth exploration of microeconomic theory, focusing on advanced topics that build upon foundational knowledge. Nature, scope and methods of economics, basics problems of an economy, equilibrium, statics and dynamics. Theory of choice & demand under uncertainty & risk. Intertemporal choices, technology, production functions & laws of production, isoquants or equal product curve, cost analysis and profit maximization. Competition, monopoly, oligopoly, game theory, moral hazards and adverse selection. Signaling, optimal contracts, general equilibrium and welfare economics.

Advance Macroeconomic Theory

This course provides MPhil students with an in-depth understanding of advanced macroeconomic theories and their applications. Theory and measurement of national income Accounts, product side and income side. measurement of the Components of national accounts, price indices, Construction and problems, real VS nominal GNP. AS­AD Model, Phillips Curve, Models of Price adjustment and Inflation Persistence, Nominal Money Growth, Economic -Growth, Representative Agent Model (Static Model), Linear Technology and Comparative Statistics, Dynamic Economy, Neo Classical Growth and Dynamic Programming, Growth with Overlapping Generation Models, Endogenous Growth, Cash In Advance Model, Shopping Time Model, Theory of Investment, Time Inconsistency 01″ Monetary Policy, Staggered Pricing Model, Real Business Cycle. Aggregate demand, determination of equilibrium level of income & output, effects on equilibrium of shifts in aggregate demand (Multiplier Analysis) of changes in government Spending, taxes and transfer payment. Theories of consumption, investment, money supply and money demand. The IS-LM model and the interaction of fiscal and monetary policies. Rational expectations and uncertainty in macroeconomic models. Macroeconomic equilibrium with internationally mobile capital, sticky prices and exchange rate overshooting.

Quantitative Methods for Economic and Finance

Observational Studies vs. Experimental Studies, Quasi Experiments, Time Series Data and Longitudinal/Panel Data. Review: linear algebra, CDF and Histogram, binomial probabilities, theoretical distributions, random variables and hypothetical populations. discrete distributions: uniform, binomial, Poisson continuous distributions: Uniform, normal distributions, central limit theorem, matching samples to populations, exact distributions, asymptotic and simulated distribution, testing simple hypothesis, tests for normality, two random variables: conditional and marginal distributions, correlations:. ecological correlations and limitations of correlation, Regression: basic concepts, deep structure of regression models, interpreting regression results, hetroscedasticity and autocorrelation, GQ, BP and Eicker White test for hctroscedasticity, dummy variables, F-test for Joint Significance of Regressors, unit roots and spurious regressions, T statistics and Significance of Regressors, Modeling Volatility: ARCH, GARCH, The ARCH­M Model, State-Space Models and the Kalman Filter, G2S and S2G modeling strategy for Model Selection, Monte Carlo Simulation and Bootstrap Simulation.

Financial Institution and Market

The financial markets and the economy, depository institutes, investment banks, insurance companies, pension funds and investment companies, derivative market: futures and options and instruments, equity markets and instruments, Interest rate, debt markets and instruments, foreign exchange markets, global financial markets.

Financial Econometrics

Basic conventional econometrics: Development and Analysis, univariate Time Series modeling and forecasting, multivariate analysis, modeling long Run relationship, modeling the variance, forecasting, simultaneous Equation Model, Penal data estimation and factor analysis.

Advance Financial Econometrics

This course provides a comprehensive study of advanced econometric methods, tailored for MPhil-level students with prior knowledge of fundamental econometric techniques. It delves into sophisticated topics such as time series econometrics, panel data analysis, instrumental variable estimation, the generalized method of moments (GMM), and models for limited dependent variables. Financial Time Series and Their Characteristics, Linear Time Series Analysis and Its Applications, Conditional Heteroscedastic Models, Nonlinear Models and Their Applications, High-Frequency Data Analysis and Market Microstructure, Continuous-Time Models and Their Applications, Extreme Values, Quantiles, and Value at Risk, Multivariate Time Series Analysis and Its Applications, Principal Component Analysis and Factor Models, Multivariate Volatility Models and their Applications, State-Space Models and Kalman Filter, Markov Chain Monte Carlo Methods with Applications. Emphasis is placed on equipping students with the analytical tools and practical skills required to carry out high-quality empirical research. Through applied exercises and data-driven case studies, students will learn to implement advanced econometric techniques and critically interpret the outcomes within real-world economic contexts.

Monetary Economics

Output inflation relationship, Dynamic programming, money in utility [unction, Cash in Advance Model (CIA with certainty and uncertainty), Shopping Time model, Friedman Rule. Friedman rule with money, Government budget constraint, Staggered price model. Baumol  Tobin Model, Lucas Model, Taylor Model, Calvo Model, Financial Crisis modeling, monetary policy and lending channel, inflation targeting evidence, Habit Persistence, Financial integration, real interest parity conditions.

Advance Monetary Economics

Introduction, Empirical Evidence on Money, Prices, and Output,  Money in the Utility Function, Money and Transactions, Money and Public Finance, Money, Output and Inflation in the Short Run, Monetary Policy Operating Procedures, Interest Rates and Monetary Policy, Policy Analysis in New Keynesian Models.

AI and Machine Learning for Finance

This course introduces MPhil students to the core concepts and applications of Artificial Intelligence (AI) and Machine Learning (ML) in finance. Topics include supervised and unsupervised learning, neural networks, and natural language processing, with applications in risk management, forecasting, algorithmic trading, and portfolio optimization.

Students will gain hands-on experience using financial datasets and tools such as Python or R to implement AI/ML models. The course emphasizes both theoretical understanding and practical skills for applying intelligent systems to real-world financial problems.

Data Science for Economic Forecasting

This course provides MPhil students with the tools and techniques of data science to enhance economic forecasting and decision-making. It covers key methods such as data wrangling, exploratory data analysis, machine learning algorithms, and predictive modeling, with a focus on macroeconomic and financial data.

Students will learn how to apply data science tools using programming languages like Python or R, and leverage techniques such as time series analysis, regression models, and model evaluation metrics. The course emphasizes practical application, enabling students to build data-driven forecasting models to address real-world economic challenges.

FinTech & Digital Banking

This course explores the evolving landscape of financial technology and its transformative impact on banking and financial services. Designed for MPhil students in Economics and Finance, it examines key innovations such as digital payment systems, blockchain technology, peer-to-peer lending, robo-advisory services, and open banking.

Students will analyze how FinTech is reshaping traditional banking models, enhancing financial inclusion, and challenging regulatory frameworks. The course also covers cybersecurity, data privacy, and the role of artificial intelligence in financial service delivery. Through case studies and practical insights, students will gain a deep understanding of the technologies driving digital finance and develop the skills to critically assess emerging trends and business models in the FinTech ecosystem.

Financial Modeling

This course presents the theory and practice of financial management, emphasizing computer-based modeling and forecasting. The application of spread sheet-based tools and techniques in financial decision-making process is mainly focused.  The objective of the course is to design and construct useful and robust financial modeling applications related to financial decisions includes financial statement analysis, cash budgeting, cost of capital determination, capital budgeting, and capital structure choices. The course further covers the investment related models to calculate the variance, covariance matrix for financial securities and use it to select optional portfolios.

Financial Analysis

Financial statements, their structure, importance and their limitations. Analysis and interpretation of financial statements. Comparative financial statements, current position analysis, stability analysis, profitability analysis and market valuation analysis. Emphasis is placed on the interpretation of financial data by means of comparative statements, trend percentages, detailed analysis of working capital and extensive use of various generally accepted ratios, special problems resulting from current accounting practices in Pakistan and to limitations of statement analysis.

Project Finance

The goal of this course is to equip participants with an overview of Project Finance and learn about the difference between project finance and other corporate debt financing alternatives.  The course will help to use qualitative and quantitative tools and measures to distinguish the key risks, the interpret each of the risks to determine their severity and potential impact on the transaction structure. Appreciate how the mechanisms in the transaction documents operate to protect the creditors and evaluate the protection provided by providing the knowledge that how debt and equity providers evaluate the financial performance of projects. Finally build a credit rationale in order to make and substantiate investment decision

Real Estate Finance

This course presents a toolkit for maximizing investment returns. Students closely examine the four sources of real estate returns (cash flow, appreciation, loan amortization, and tax advantages) which have an impact on their investment strategy. They develop an investment scorecard for scrutinizing new investment opportunities. They practice a rigorous, rational approach to deciding when to hold, sell, refinance, or renovate a property. They study strategies for raising capital from investors and work through examples of successful partnership structures. The main topics covered may include the following: land acquisition, finance; choice of entity; tax aspects; management (leasing, environmental); disposition of real property (sale of mortgaged property, foreclosures, wraparound mortgages, sale-leasebacks); and recent legal developments. Finally, students learn how to efficiently manage a growing portfolio of cash-flowing assets.

Behavioral Finance.

Foundations and challenges of standard finance expected utility theory. Portfolio theory market efficiency, agency problem, anomalous trading behavior, decisions and puzzling asset returns. Prospect theory, heuristics and biases, and emotions, group thinking and social forces loss aversion.

Probability weighting framing menta accounting representativeness familiarity anchoring over confidence excessive optimism group thinking and heding. Social pressure limited stock participation equity home bias and under diversification. Chasing winners attention grabbing. Disposition effect, excessive trading aggregate market and cross-sectional asset returns. Equity premium puzzle. Small vs big value vs growth winner vs loser post earnings announcement drift.

Cases in Corporate Finance

In this course important concepts from capital market theory by considering real world case studies. Thus, the course aims at closing the gap between financial theory and practice. It highlights the immediate applicability of the – at first glance – purely theoretical results. The course concentrates on methods and concepts relevant to the corporate finance business of banks (i.e. M&A, debt and equity issuance). Class participants are expected to discuss cases in small study groups and develop possible solutions to problems described therein. The main topics will cover the following aspects through Case studies, Corporate Financing Decisions, Uncertainty, Portfolio Choice, Capital Asset Pricing Model, Discounted Cash Flow Approach (DCF) to Company Valuation, Financial Planning, The Cost of Capital, Estimating the Cost of Capital, Project Valuation, Financing M&A Transactions, Leveraged Recapitalization.

Advance Portfolio Management

Introduction, Financial markets and their role in global economic system, Emerging trends in global financial markets, Stock market indices, Risk and return Relationship, Functioning of stock markets, Mean variance uncertainty, Markowitz efficient portfolio Theory, Application of theory, Market Equilibrium, Capital asset pricing model (CAPM), Inter temporal capital asset pricing model(ICAPM), Application of models, Arbitrage pricing theory (APT), Fama and French three factor model, Macroeconomic based multifactor models, Application of model, Comparison between assets pricing model, Recent Research (paper will be distributed for discussion, Fundamental analysis, Technical analysis, Bond portfolio management strategies, Equity portfolio management strategies, Evaluation of portfolio Performance, Intro to Derivatives Structures.

Sustainable & Green Finance

This course provides MPhil students with an in-depth understanding of the principles and practices of sustainable and green finance. It covers key concepts such as environmental, social, and governance (ESG) criteria, green bonds, sustainable investment strategies, and the role of finance in addressing climate change and promoting environmental sustainability.

Students will explore how financial markets and institutions integrate sustainability into investment decisions, risk management, and corporate governance. The course also examines regulatory frameworks, green financing mechanisms, and the growing importance of responsible investing in shaping the future of global financial systems. By the end of the course, students will be equipped with the tools and insights to evaluate and contribute to the development of sustainable finance practices, aligning financial goals with environmental and social impact.

International Finance

This course covers selected topics in international macroeconomics and finance. The course starts with the exploration of the major sources of data on international macroeconomics, and the main stylized facts contained in this data. Then the course will apply economic theory to the macroeconomic problems and policies of open economies. The main economic linkages between countries of the world are through the trade balance and capital movements. The course therefore covers an extensive discussion of how these relationships are determined. In this context, exchange rate and the workings of the foreign exchange market are at the center stage. The interdependencies in the world economy and the transmission of shocks between countries will be studied. A central policy issue has been the choice between fixed and flexible exchange rates, in these context different aspects of monetary policy and fiscal policy will be examined.

Financial Risk Management

Risk categories, risk management process, derivative markets and instruments and hedging: forward contracts, futures options, swaps, caps, floors collars, types of risk incurred by financial Institutions, managing credit risk on the balance sheet, managing liquidity risk on the balance sheet, managing risks on balance sheet: interest rate risk, insolvency risk, managing risk with derivative securities, managing risk with loan sales and securitization, managing risk in foreign exchange market.

Banking Operations and Risk Management

Overview of Operational Risk and its Occurrence in Various Industries, Risk and Uncertainty, Risk Decisions for the Manager, Operational Risk Management And Operational Risk Measurement, Risks in Operating an Enterprise, Supply Chain Risk – introduced by directed to Kellogg Supply Chain courses, Operational Risk in Financial Services, Risk Management Decisions. Motivation for studying Operational Risk, Definition of Operational Risk and what it is not, New Types of Operational Risk, E-commerce, Mergers and Spin-offs, Automation, Outsourcing, New relationships in marketplace (B2B relationships and B2C relationships), Operational Risk Pillars, Processes (Security gaps, Data flows, Feedback, New standard for 24/7, New market relationships, Global footprints, Basel II Accords), Identification and Assessment or Operational Risk

Insurance and Actuarial Sciences

The course focuses entirely on all aspects of the insurance sector to well-equipped students for a promising career in the insurance sector. The course covers the economics of insurance, life tables, life insurance, life annuities, Insurance Mechanism; Risk and Utility, Corporate Demand for Insurance, Organizational Structure in the Insurance Firm; Insurance Company Operations, Reinsurance, Insurance Pricing, Insurance Contract and Insurance Regulations, Insurance Market (Motor Insurance and COE, Life Insurance; Health Insurance, Employee Benefit Planning and Retirement Planning, benefit premiums and reserves, multiple-life theory, multiple-decrement models, risk theory, and population theory. 

Financial Derivatives

Introduction to Financial Engineering and Derivatives, Fundamentals of pricing, An Introduction to Forwards and Options, Insurance, Collars, and Other Strategies, Financial Forwards and Futures, Interest Rate Forwards and Futures, Parity and Other Option Relationships, Binomial Option Pricing, The Black‐Scholes Option Pricing Model, Financial Engineering and Security Design, Financial Engineering and Security Design, Financial Engineering and Security Design, Hybrid Instruments and Securities

Corporate Governance

Corporate governance deals with the complex set of relationships between the corporation and its board of directors, management, shareholders, and other stakeholders. In the recent years, the regulators and legislators have intensified their focus on how businesses are being run. They are endeavoring to create a template for new corporate governance and disclosure measures, which is beneficial for both the stakeholders and controllers. This course intends to review the aforementioned aspects and take stock of progress in the area of corporate governance locally as well as globally. Issues in corporate governance: concepts, ethics, role of company and history. Directors and shareholders: powers and rights, balance of power on the board: non-executive directors, relation with shareholders, financial reporting and auditing, director’s remuneration. Risk management and corporate governance.

Venture Capital and Private Equity

Venture capital operations, raising and structuring Venture Capital Funds, asset allocation and the perspective of limited partners;, strategy and focus of venture capital firm; managing global private ,equity firms; valuation and investing assets, corporate strategy, entrepreneurial finance, nonprofit marketing, strategic planning, and venture capital; evaluation of a Business Model and Due Diligence, transaction structuring and term sheet negotiations, contracts and VC monitoring, exit strategies.

Credit Risk management

This course provides MPhil students with an advanced understanding of credit risk management, focusing on the identification, assessment, and mitigation of risks associated with lending and credit portfolios. Students will explore key concepts such as credit scoring, credit ratings, default risk, and the modeling of credit risk using quantitative techniques like logistic regression and credit risk models (e.g., Credit Valuation Adjustment and Value at Risk).

The course covers both theoretical foundations and practical tools for managing credit risk in financial institutions, including risk-based pricing, collateral management, and the role of credit derivatives. Emphasis is placed on the regulatory environment, including Basel III and other international standards, and their implications for financial stability and risk management practices. By the end of the course, students will be equipped to analyze credit risk, develop effective risk management strategies, and contribute to decision-making processes in financial institutions.

Economic Development and Finance

The scope of economic development, macroeconomic relationships and market structure. It includes an overview of private capital markets and financing sources to understand capital market imperfections that constrain economic development; business accounting; financial statement analysis; federal economic development programs; and public finance tools. Program models covered include revolving loan funds, guarantee programs, venture capital funds, bank holding companies, community development loan funds and credit unions, micro enterprise funds, and the use of the Community Reinvestment Act to leverage bank financing.

Emerging issues in Finance

Capital Budgeting: incorporating risk analysis, the cost of capital and problems in measurement and estimation, the capital structure: practical issues in capital structure policy, .asset pricing models: theory and evidence, portfolio management strategies, equity valuation models, valuing fixed income securities, fixed income. Portfolio management, option trading strategies and hedging with derivatives, hedge funds: organization and strategies, sub-prime meltdown in US financial market, lessons from financial disasters, analysis of real estate investment, financial instruments of Islamic banking.

Treasury and Funds management

Understanding the Regulatory Environment (The need for, and objectives of, regulation, Sources of regulation, Prevention of money laundering and financial crime, Understanding money laundering offences, Designing an effective reporting system, Terrorist financing, Money laundering and tax evasion, Financial crime, Preventing fraud, Corruption, Market manipulation/misleading statements, insider dealing, and market abuse), Industry Knowledge and Awareness (Financial services organizations: background, Codes of corporate governance, regulatory principles, Overview of commercial laws and mechanisms governing legal persons and arrangement), The Role of the Compliance Officer, Compliance in practice (Compliance governance, Internal and external relationships, Links between compliance, culture and ethics, Specific internal compliance control issues, Risk management.

Taxation theory and practice

This course offers MPhil students a comprehensive understanding of the principles, theories, and practical applications of taxation within economic and financial contexts. It covers the foundational concepts of tax systems, tax policy, and tax administration, alongside a critical analysis of different tax structures including income, corporate, and consumption taxes.

Students will explore the economic impacts of taxation on individuals, businesses, and government revenues, while also examining key topics such as tax incidence, efficiency, equity, and compliance. The course emphasizes both theoretical frameworks and practical issues in tax policy design, implementation, and reform. Through case studies and real-world examples, students will gain insights into global tax practices, regulatory challenges, and emerging trends in digital and green taxation. By the end of the course, students will be well-prepared to evaluate and contribute to the development of tax policies that foster economic growth and social equity.

Islamic Banking and Finance Markets

To familiarize students with developments in global financial and capital markets in relation to Islamic banking and finance; Provide students with an overview of Islamic finance law, regulations and aspects of the Islamic banking system: Provide students with an understanding of Islamic banking products and concepts; Challenges faced by Islamic banks. Riba, Gharar, the Existing model of Islamic Banking, Shariah Compliant Financial Instruments for Routine Banking Operations, Deposit Mobilization by Banks, Bank Financing, Islamic Banking in practice (Sudan, Iran, Malaysia, Pakistan, Other Muslim Countries), Divisible and Tradable Financial Instruments for Business Industry and Government Needs, International Transactions without Riba, Pricing of Islamic Financial Products, Risk Management in Islamic Banking, Inter-bank Money Market, Islamic capital market, Zakah and Islamic Banking, Review of AAOIFI Standards, Insurance in the Islamic Framework, Selected Issues in Accounting for Islamic Banking.

Forensic Accounting and Fraud Examination

Students will develop increased awareness about Fraud in the Accounting Profession (Elements of Fraud, Fraud Categories, Fraud Definitions, and Schemes, Psychology of Fraud), the circumstances in which it arises (The Role of Internal Controls), techniques for detecting (Fraud Investigation), measuring and preventing fraud (Evidence Collection), and skills needed to help in the eventual resolution of discovered frauds. Industry Knowledge and Awareness (Financial services organizations: background, Codes of corporate governance, regulatory principles, Overview of commercial laws, The Role of Sarbanes Oxley and SAS No. 99 and mechanisms governing legal persons and arrangement), The Role of the Compliance Officer, Compliance in practice (Compliance governance, Internal and external relationships, Links between compliance, culture and ethics, Specific internal compliance control issues, Risk management.