What is the difference between the Financial Economics and Business majors?

Oberlin is launching two majors – the first one is Financial Economics, a major in the Economics department. The second is the major in Business. Not surprisingly, the close relationship between these two topics have students frequently asking me, “what’s the difference?”

How are they similar?

The Financial Economics and the Business Majors are both excellent courses of study to prepare students for careers in business. Both majors are data-driven and aim to build a strong analytical foundation that students master through applications to realistic situations. Both incorporate the liberal arts tradition of developing critical thinking, oral/written communication, and leadership skills.

There are natural areas of overlap between these two majors. Financial concepts and techniques are important to understanding how businesses and organizations make resource decisions. These same concepts inform how financial markets work. Additionally, the underlying value of traded securities comes from beliefs on how individual firms create value for their customers. As such, there is a deep connection between the study of Financial Economics and Business.

How are they different?

• Business focuses on operating decisions; it is concerned with how assets, opportunities, and talent are combined to generate value. Financial Economics, on the other hand, focuses on how firms and governments can best finance their operations to meet their objectives. It also involves studying financial markets, including the valuation and regulation of securities, the trading environments where these securities are issued and traded, financial stability, and the broader impact of these on societal welfare.
• Business is focused more on the micro-perspective of individual firms and how decisions affect their competitive advantage in providing value for customers. Financial Economics has a stronger emphasis on understanding the macro-picture of financial systems and their regulation, examining how decisions create value for investors.
• Like other economics majors, Financial Economics includes a structure of senior-year seminars, where students are expected to go deeper in examining a sub-topic of interest. Students in the Business major do not have senior seminars; rather, they must complete an experiential learning component (e.g., an internship) along with a capstone course in strategy that integrates learnings from their prior courses in marketing, operations, and finance into a general manager perspective.